WP  Global Economy  2017.10.31

Working Paper(17-011E) "Market Access, Technology, and Plant Lifecycles: A Natural Experiment from Japan's Opening to Trade in 1859"

This is working paper.

This paper examines how trade regime change has affected the lifecycle of manufacturing plants. For this purpose, we exploited the historical event of Japan's opening to trade in 1859 as a natural experiment. Based on plant-level data for 1902 and 1919, we explore how lifecycles of plants differ between the periods before and after 1859. It was found that lifecycles of plants were indeed different between these two periods: (1) a plant grew much faster as it aged after 1859 than before 1859; (2) this effect is larger for plants in exporting industries and plants located in metropolitan areas; (3) plant size at entry was larger for plants that entered after 1859 compared to those that entered before 1859. The difference in plant lifecycles between the periods before and after 1859 was confirmed by long-term time series data covering both periods. Based on these findings, we argue that access to markets and advanced technologies affected the lifecycle of plants.