Proposal preview

Crossroads of Globalization: Market-Making in Modern East Asia

From the mid-1850’s, East Asia was forced to “open” its ports by the Western powers. After the opening of its ports, East Asia was incorporated into the global economy, including Western forms of infrastructure, like telecommunications and transportation networks. As this economic growth was highly dependent on the development of markets, we focus on the formation of the commodity, capital, and labor markets in East Asia from the late nineteenth century to the early twentieth century, as well as the underlying infrastructure. First, we analyze the rise of the rice market as a commodity market that fostered intra-regional transactions and the trans-national circulation of merchants around the East Asian region. Specifically, we examine the impact of telecommunications networks on the integration of the rice market, including the introduction of the exchange system in Chosŏn Korea. Second, we analyze the development of the capital and labor markets where traditional markets operated alongside modern markets throughout Open Ports East Asia. In the capital markets, we examine the role of Japanese merchant families that simultaneously implemented traditional and modern investment strategies in the capital markets. In Asian labor markets, technology transfer from the West changed the requirements and conditions for skilled labor in East Asia as workers were reclassified according to both traditional and modern characteristics of labor. Finally, in terms of infrastructure, we analyze the establishment of the transportation infrastructure that was established in Hokkaido and colonial Taiwan, as well as the electric power network that was developed in colonial Korea. In this manner, we show how the waves of globalization that swept across East Asia in the open ports period led to a realignment of socio-economic activity as necessitated by the rise of new markets and the reorganization of existing markets.

Organizer(s)

  • Mikio Ito Keio University ito@econ.keio.ac.jp Japan
  • Myungsoo Kim Keimyung University skyofall@naver.com Korea
  • Lung-Pao Tsai National Taipei University henrytsai8@hotmail.com Taiwan

Session members

  • Mikio Ito, Keio University
  • Steven Ivings, Kyoto University
  • Howard Kahm, Yonsei University
  • Myungsoo Kim, Keimyung University
  • Kiyotaka Maeda, Keio University
  • Masanobu Mishina, Shimonoseki City University
  • Akihiko Noda, Kyoto Sangyo University
  • Jin-Seok Oh, Pai Chai University
  • Kentaro Saito, Kyoto Sangyo University
  • Lung-Pao Tsai, National Taipei University

Discussant(s)

  • Shigehiko Ioku Keio University ioku@z7.keio.jp
  • Toshihito Nagahiro Wakayama University nagahiro@eco.wakayama-u.ac.jp
  • Nataria Mora Sitja University of Cambridge nm371@cam.ac.uk
  • Chiaki Yamamoto Osaka University cy@econ.osaka-u.ac.jp
  • Hideyoshi Yagashiro Senshu University h-yagashiro@isc.senshu-u.ac.jp

Papers

Panel abstract

From the mid-1850’s, East Asia was forced to “open its ports” by the Western powers. After the opening of its ports, East Asia was incorporated into the global markets which enabled the rapid technological transplantation of Western aspects of infrastructure, including the telecommunications and transportation networks. These waves of globalization that swept across East Asia led to a realignment of socio-economic activity as necessitated by the rise of new markets and the reorganization of existing markets. Consequently, we attempt to show how the markets of modern East Asia simultaneously exhibited traditional characteristics arising from its internal historical evolution as well as the modern characteristics transplanted from the global economy. In the contingent process of mutual interaction and conflict between these characteristics, we attempt to show the trajectory by which modern East Asia transitioned from the premodern to the modern era.

1st half

Discretion versus Policy Rules in Futures Markets: A Case of the Osaka-Dojima Rice Exchange, 1914-1939

Mikio Ito, Kiyotaka Maeda, and Akihiko Noda

We investigate the relationship between the market efficiency of rice futures transactions in Osaka and the Japanese government’s intervention in rice distribution through direct buying and selling of rice during the interwar period, from the middle 1910s to 1939, considering the context of “discretion versus rules.” We use a time-varying vector autoregression model to compare market efficiency and the government’s actions over time. We find the following two facts by featuring the time-varying nature of market efficiency. First, intervention with discretionary power disrupted the rice market and reduced market efficiency in the exchange. Second, market efficiency improved in accordance with the reduction in the government’s discretionary power to operate the rice policy in the commodity market. When the government obtained this power, market efficiency often declined. Conversely, even though the government implemented large-scale interventions, the market efficiency improved when the government chose systematic rule-like behavior.

We investigate the relationship between the market efficiency of rice futures transactions in Osaka and the Japanese government’s intervention in rice distribution through direct buying and selling of rice during the interwar period, from the middle 1910s to 1939, considering the context of “discretion versus rules.” We use a time-varying vector autoregression model to compare market efficiency and the government’s actions over time. We find the following two facts by featuring the time-varying nature of market efficiency. First, intervention with discretionary power disrupted the rice market and reduced market efficiency in the exchange. Second, market efficiency improved in accordance with the reduction in the government’s discretionary power to operate the rice policy in the commodity market. When the government obtained this power, market efficiency often declined. Conversely, even though the government implemented large-scale interventions, the market efficiency improved when the government chose systematic rule-like behavior.

Foreign Trade at a Northern Treaty Port: Hakodate, 1854-1882

Steven Ivings

In the decades that followed Hakodate’s opening, the port’s trade and population expanded rapidly, transforming what had been “a long fishing village” into a bustling port of over 50,000 by the mid-1880s. This paper, however, argues that this expansion was not primarily a result of the opening of Hakodate to international trade; rather, it was the opening of Hakodate’s hinterland which allowed Hakodate to prosper, enhancing its existing role as a hub for the marketing and distribution of Northern marine products throughout Japan. Furthermore, it will closely examine the struggles of foreign traders to gain a foothold in Hakodate’s principal trades/markets, giving a face to foreign enterprise in nineteenth century East Asia.

In the decades that followed Hakodate’s opening, the port’s trade and population expanded rapidly, transforming what had been “a long fishing village” into a bustling port of over 50,000 by the mid-1880s. This paper, however, argues that this expansion was not primarily a result of the opening of Hakodate to international trade; rather, it was the opening of Hakodate’s hinterland which allowed Hakodate to prosper, enhancing its existing role as a hub for the marketing and distribution of Northern marine products throughout Japan. Furthermore, it will closely examine the struggles of foreign traders to gain a foothold in Hakodate’s principal trades/markets, giving a face to foreign enterprise in nineteenth century East Asia.

Transactions in securities markets and investment activities in pre-war Japan

Masanobu Mishina

The objective of this paper is to examine the role of the securities market that supported the economic development of East Asia. In particular, we focus on a representative wealthy person in Japan, named Yozo Ito, and analyze his activities in the Japanese securities market. Our study produces two findings. First, a cycle of soaring and collapsed stock prices were repeated in the Tokyo securities market due to the influence of the First World War. After that, in the 1920s, the issue price of bonds gradually exceeded the issue price of government bonds. Second, Yozo Ito’s main targets of investment were the railway, electric power and spinning businesses. His biggest investment destination, especially, was Fuji Gas Spinning, as he kept buying that stock in the 1920s, when the stock prices fell. He also purchased UK government bonds during the First World War, and sold them in 1919.

The objective of this paper is to examine the role of the securities market that supported the economic development of East Asia. In particular, we focus on a representative wealthy person in Japan, named Yozo Ito, and analyze his activities in the Japanese securities market. Our study produces two findings. First, a cycle of soaring and collapsed stock prices were repeated in the Tokyo securities market due to the influence of the First World War. After that, in the 1920s, the issue price of bonds gradually exceeded the issue price of government bonds. Second, Yozo Ito’s main targets of investment were the railway, electric power and spinning businesses. His biggest investment destination, especially, was Fuji Gas Spinning, as he kept buying that stock in the 1920s, when the stock prices fell. He also purchased UK government bonds during the First World War, and sold them in 1919.

Financial Arrangements of Small and Medium Enterprises and Regional Capital Market in Pre-war Japan

Kiyotaka Maeda

This paper examines how the financial arrangements of Japanese small and medium-sized enterprises (SMEs) on regional stock markets formed producing regions and accelerated regional economic growth at the turn of the twentieth century. We investigate the financial arrangements and shareholder distribution of the salt corporations in Kagawa Prefecture, a leading salt producing region in Japan. We argue that SMEs experienced the sharpest fluctuations in their business conditions among different firm types, since they had weak operating foundations during early industrialization. This provided an advantage to small asset holders within the region: they could hedge risks partially to invest in more than two indigenous firms, since the trends in their dividend rates varied among firms. Consequently, the establishment of SMEs promoted the regional development of non-organized stock markets, accelerating the formation of producing regions and advancing the regional economy.

This paper examines how the financial arrangements of Japanese small and medium-sized enterprises (SMEs) on regional stock markets formed producing regions and accelerated regional economic growth at the turn of the twentieth century. We investigate the financial arrangements and shareholder distribution of the salt corporations in Kagawa Prefecture, a leading salt producing region in Japan. We argue that SMEs experienced the sharpest fluctuations in their business conditions among different firm types, since they had weak operating foundations during early industrialization. This provided an advantage to small asset holders within the region: they could hedge risks partially to invest in more than two indigenous firms, since the trends in their dividend rates varied among firms. Consequently, the establishment of SMEs promoted the regional development of non-organized stock markets, accelerating the formation of producing regions and advancing the regional economy.

Labour market development and skill-standardization in Modern Japan; Skilled workers in building industries and vocational training

Kentaro Saito

Japan witnessed modernization from the late nineteenth century and its industries changed drastically. Building industries and their labour markets were not exceptional. Skilled workers in these sectors had developed their own organizations, however, these institutions had to change themselves after the Meiji Restoration in 1868, and in addition, newly introduced technologies from the Western countries led them necessary to reskill. This paper focuses on these changes in both market and institutional dimension. Firstly, we show how their labour market developed to discuss that the changes varied among regions, which led to integrate the markets in some areas and disintegrate in others. Secondly, as for new technologies, vocational training schools, such as Tokyo Apprentice College, were established to reskill the workers, which tried to give world-standard skills and knowledge to youths. Finally, this paper tries to put these process into international context of deskilling and reskilling in the age of modernization.

Japan witnessed modernization from the late nineteenth century and its industries changed drastically. Building industries and their labour markets were not exceptional. Skilled workers in these sectors had developed their own organizations, however, these institutions had to change themselves after the Meiji Restoration in 1868, and in addition, newly introduced technologies from the Western countries led them necessary to reskill. This paper focuses on these changes in both market and institutional dimension. Firstly, we show how their labour market developed to discuss that the changes varied among regions, which led to integrate the markets in some areas and disintegrate in others. Secondly, as for new technologies, vocational training schools, such as Tokyo Apprentice College, were established to reskill the workers, which tried to give world-standard skills and knowledge to youths. Finally, this paper tries to put these process into international context of deskilling and reskilling in the age of modernization.

2nd half

Seeing the Light: Structure and Development of the Electricity Market in Colonial Korea

Jinseok Oh and Howard Kahm

While the incorporation of modern Korean into the global economy has been examined, the economic history and significance of science and technology within colonial Korea has been less appreciated. This study traces the rise and development of the electricity market, and the development of electricity companies in Korea, to address the rise of a regional market in electric technologies and production. This study examines the foundational issues of the control of electric technologies by the Japanese and Koreans, both at the industrial and consumer levels, as well as their interactions with the irreducible elements of the physical environment, such as topography, in the deployment of these technologies. The unique physical and economic characteristics of colonial Korea dictated the development of the electricity market and industry that resulted in a distinctive electrical business configuration that shaped subsequent economic and social development of the peninsula.

While the incorporation of modern Korean into the global economy has been examined, the economic history and significance of science and technology within colonial Korea has been less appreciated. This study traces the rise and development of the electricity market, and the development of electricity companies in Korea, to address the rise of a regional market in electric technologies and production. This study examines the foundational issues of the control of electric technologies by the Japanese and Koreans, both at the industrial and consumer levels, as well as their interactions with the irreducible elements of the physical environment, such as topography, in the deployment of these technologies. The unique physical and economic characteristics of colonial Korea dictated the development of the electricity market and industry that resulted in a distinctive electrical business configuration that shaped subsequent economic and social development of the peninsula.

A Study on the Establishment and Operation of Incheon Rice Exchange during Colonial Korea under Japanese Rule

Myungsoo Kim

The city of Incheon has historicity in that she developed into a modern city in the process of Japanese penetration into Korea and Korea’s colonialization. Japan compelled Korea to sign a treaty of amity with Japan, which is called Ganhwado Treaty or Japan-Korea Treaty of 1876, through a gunboat diplomacy. Korea concluded commercial treaties with the Western Powers and opened its ports like Busan(1876), Wonsan(1880), Incheon(1883). With this as momentum, Korea became a member of World Capitalist System. Incheon Rice Exchange(IRE) amalgamated with Kyungsung(=Seoul) Stock Exchange and Spot Trading Market and became Incheon branch of Chosun Exchange in 1932. IRE’s management was strongly influenced by the fluctuation of Japanese economy. We can explain numerically the degree of market integration between Korean economy and Japanese economy with the time series data on IRE.

The city of Incheon has historicity in that she developed into a modern city in the process of Japanese penetration into Korea and Korea’s colonialization. Japan compelled Korea to sign a treaty of amity with Japan, which is called Ganhwado Treaty or Japan-Korea Treaty of 1876, through a gunboat diplomacy. Korea concluded commercial treaties with the Western Powers and opened its ports like Busan(1876), Wonsan(1880), Incheon(1883). With this as momentum, Korea became a member of World Capitalist System. Incheon Rice Exchange(IRE) amalgamated with Kyungsung(=Seoul) Stock Exchange and Spot Trading Market and became Incheon branch of Chosun Exchange in 1932. IRE’s management was strongly influenced by the fluctuation of Japanese economy. We can explain numerically the degree of market integration between Korean economy and Japanese economy with the time series data on IRE.

Construction of Transportation Network and Market Reorganization in Taiwan during Japanese‐Ruled Period

Lung-Pao Tsai

After Japan acquired the colony Taiwan, how to apply the modernization experience of fostering industry to the colonial Taiwan is really a question worthy of discussion. Transportation facilities are an extremely important part of the modern facilities of all countries in the world. Japan builds Taiwan’s transportation network, promotes the socio‐economic development of the island, and strengthens Taiwan’s market as a raw material, food supply, and industrial product of Japanese capitalism. The paper intends to analyze the formation of the traffic policy and transportation network of the Office of the Taiwan Governor‐General, and exemplifies how the process of construction of a transportation network will lead the market to reorganize, taking the largest coal mines of railway cargo and the green fruit industry with high economic value as examples, investigate different market effects and influences on the different products, and we can have a deeper understanding of the implications of "economic...

After Japan acquired the colony Taiwan, how to apply the modernization experience of fostering industry to the colonial Taiwan is really a question worthy of discussion. Transportation facilities are an extremely important part of the modern facilities of all countries in the world. Japan builds Taiwan’s transportation network, promotes the socio‐economic development of the island, and strengthens Taiwan’s market as a raw material, food supply, and industrial product of Japanese capitalism. The paper intends to analyze the formation of the traffic policy and transportation network of the Office of the Taiwan Governor‐General, and exemplifies how the process of construction of a transportation network will lead the market to reorganize, taking the largest coal mines of railway cargo and the green fruit industry with high economic value as examples, investigate different market effects and influences on the different products, and we can have a deeper understanding of the implications of "economic planning."