{"id":3691,"date":"2016-10-04T05:58:03","date_gmt":"2016-10-04T05:58:03","guid":{"rendered":"http:\/\/benbansal.me\/?p=3691"},"modified":"2016-10-04T06:01:35","modified_gmt":"2016-10-04T06:01:35","slug":"japans-infrastructure-investments","status":"publish","type":"post","link":"https:\/\/benbansal.me\/?p=3691","title":{"rendered":"Japan&#8217;s infrastructure investments"},"content":{"rendered":"<p>I have decided to put some of my little research assignments (largely &#8220;self-assigned&#8221;, that is) onto the blog in order to share them more widely and get myself to be more disciplined in articulating my thoughts. This one below is about Japan&#8217;s infrastructure investments over the last 100+ years.<\/p>\n<p><a href=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/infrastructure-spending.jpg\"><img decoding=\"async\" class=\"size-medium wp-image-3692 alignnone\" alt=\"infrastructure spending\" src=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/infrastructure-spending-580x326.jpg\" width=\"580\" height=\"326\" srcset=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/infrastructure-spending-580x326.jpg 580w, https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/infrastructure-spending-940x529.jpg 940w, https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/infrastructure-spending.jpg 998w\" sizes=\"(max-width: 580px) 100vw, 580px\" \/><\/a><\/p>\n<p><!--more-->It comes from this JBIC paper <a href=\"http:\/\/jica-ri.jica.go.jp\/IFIC_and_JBICI-Studies\/jica-ri\/english\/publication\/archives\/jbic\/report\/review\/pdf\/report03_5.pdf\">here<\/a>. There is much else to chew on in it, but for now, the most interesting bits from the graph above:<\/p>\n<ul>\n<li>It took until about 1960 for transportation sector investment to reach the pre-war peak of about 1.25% of GDP. It is perhaps a little surprising how long Japan was sustaining high (reconstruction) growth rates with such low figures. It also suggests that Japan was operating on pre-war infrastructure and rolling stock for a relatively long time.<\/li>\n<li>After 1960, and with Ikeda&#8217;s infrastructure-heavy income doubling plan, transportation sector investments increased rapidly, reaching 3.5% of GDP by 1980. GDP growth had already come down from its 1960s heights.<\/li>\n<li>Table 1 in the paper shows how this intuitively tallies with a much lower ICOR in the last period of observation in this particular research (1965-1975, ICOR = 5.4 compared to just 2.8 from 1954-1965) &#8212; i.e. much more investment was needed to generated one more unit of GDP as time went by.<\/li>\n<li>Interestingly, it took the entire observation period (i.e. until about 1980) for electricity sector investments to reach their pre-war peak of about 1.5% of GDP. Before the war, when Japan was in its early stages of industrial development, electricity demand growth was far in excess of GDP growth, as shown in Figure 7 of the paper. After the war, electricity demand grew much more in tandem with GDP growth. This illustrates how despite all the wartime destruction, Japan enjoyed a head start in its development and benefited from a substantial surviving capital stock.<\/li>\n<\/ul>\n<p>The period under observation in the graph is also one of unprecedented urbanisation. Here is the share of Japan&#8217;s population living in cities as well as Tokyo&#8217;s total population from the 1920s until 1970:<\/p>\n<p><a href=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/population-stats.jpg\"><img decoding=\"async\" class=\"size-medium wp-image-3694 alignnone\" alt=\"population stats\" src=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/population-stats-580x210.jpg\" width=\"580\" height=\"210\" srcset=\"https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/population-stats-580x210.jpg 580w, https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/population-stats-940x341.jpg 940w, https:\/\/benbansal.me\/wp-content\/uploads\/2016\/10\/population-stats.jpg 1060w\" sizes=\"(max-width: 580px) 100vw, 580px\" \/><\/a><\/p>\n<p>Hence much of the infrastructure investment took place in the growing cities. Most of it came in the form of elevated highways, new subway lines and other big-ticket investments. My Tumblr features a lot of the imagery for this, e.g. <a href=\"http:\/\/postwarjapan.tumblr.com\/image\/102404141075\">here<\/a>.<\/p>\n<p>From a brief look at the data I have at hand, I would find it rather difficult to rebuild above statistics and ensure that I capture all infrastructure spending of the government. The postwar model of Japan&#8217;s growth was &#8220;notorious&#8221; for channelling much investment spending off-budget, primarily via the Fiscal Investment and Loan Program (FILP).<\/p>\n<p>I also wonder whether the above statistics include the relatively small yet important share which went into the less visible but equally important &#8220;neighbourhood infrastructure&#8221; (think sewerage, smaller roads, the often haphazard telephone and electricity lines and so on).<\/p>\n<p>They were largely built\u00a0<em>in situ (<\/em>which, as Matias from Urbanology <a href=\"https:\/\/www.scribd.com\/document\/62862715\/The-Tokyo-Model-of-Urban-Development-Echanove-1-7-07-1\">thinks<\/a>, brings with it many advantages) and thus preserved most neighbourhood&#8217;s typology, allowing for incremental upgrading of entire city blocks.<\/p>\n<p>In order to find out about this, one can look at municipal finances, as many of these local investments fell under the remit of, say in Tokyo&#8217;s case, the 23 special wards. There were also private companies which invested in infrastructure prior to them providing municipal services.<\/p>\n<p>If anyone has any insights on that, please share! I will also put any research findings in this direction up here.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I have decided to put some of my little research assignments (largely &#8220;self-assigned&#8221;, that is) onto the blog in order to share them more widely and get myself to be more disciplined in articulating my thoughts. This one below is &hellip; <a href=\"https:\/\/benbansal.me\/?p=3691\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,24,4],"tags":[],"class_list":["post-3691","post","type-post","status-publish","format-standard","hentry","category-academia","category-history","category-japan"],"_links":{"self":[{"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/posts\/3691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/benbansal.me\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3691"}],"version-history":[{"count":7,"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/posts\/3691\/revisions"}],"predecessor-version":[{"id":3699,"href":"https:\/\/benbansal.me\/index.php?rest_route=\/wp\/v2\/posts\/3691\/revisions\/3699"}],"wp:attachment":[{"href":"https:\/\/benbansal.me\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/benbansal.me\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/benbansal.me\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}