NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth

Randall Morck, Masao Nakamura

NBER Working Paper No. 13171
Issued in June 2007, Revised in July 2007
NBER Program(s):Corporate Finance, Industrial Organization, Economic Fluctuations and Growth

Rosenstein-Rodan (1943) and others posit that rapid development requires a 'big push' -- the coordinated rapid growth of diverse complementary industries, and suggests a role for government in providing such coordination. We argue that Japan's zaibatsu, or pyramidal business groups, provided this coordination after the Meiji government failed at the task. We propose that pyramidal business groups are private sector mechanisms for coordinating and financing 'big push' growth, and that unique historical circumstances aided their success in prewar Japan. Specifically, Japan uniquely marginalized its feudal elite; withdrew its hand with a propitious mass privatization that rallied the private sector; marginalized an otherwise entrenched first generation of wealthy industrialists; and remained open to foreign trade and capital.

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Document Object Identifier (DOI): 10.3386/w13171

Published: Randall Morck & Masao Nakamura, 2007. "Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth," Enterprise and Society, vol 8(03), pages 543-601.

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