TEXTILES

The textile industry, Japan’s largest before the war, was dealt a crushing blow in World War II, from which it has not yet fully recovered, in contrast with most other sectors of Japan’s economy. The number of cotton spindles was reduced from 11.5 million in 1939 to a low of 2.0 million in 1945. By 1950 spinning capacity was built back to 4.3 million and in 1956 it reached 9.0 million, or approximately three-fourths of the prewar peak. In contrast, the United States had 23 million spindles in 1956.⁷

The status of the four major sectors of the textile industry, as compared with prewar peaks, may be seen in Table V-1. Only in the case of rayon staple, spun rayon yarn, and wool yarn was output in 1956 higher than the prewar level.⁸ Cotton yarn and fabric output was only 70 percent of the prewar peak. Japan’s 3.5 billion square yards of cotton fabric production was approximately one-third that of the United States and about three-fifths that of India.⁹

Silk is the most retarded of Japan’s textile industries. Both raw silk output and silk fabric production are less than half of prewar peak levels. Mulberry field acreage is but 21 percent of prewar. Chiefly responsible for this decline in the one sector of the Japanese textile industry which requires no imported materials is the reduction in raw silk consumption in the United States (see Table V-2). Before the war the United States took over 90 percent of Japan’s raw silk exports, largely for women’s stockings. Since 96 percent of women’s stockings are now made of nylon and but 0.2 percent of silk, U.S. raw silk consumption is only about a tenth of prewar. In Japan, too, per capita consumption of silk is now lower than before the war. In contrast, per capita consumption of chemical textiles is almost four times prewar levels. Silk exports are less than a fifth of prewar volume, and the ratio of exports to production now stands at 24 percent, against 71 percent before the war. Not only has Japan largely lost an important source of foreign earnings, but many Japanese farmers have suffered a decline in a major income supplement, for cocoons are raised in the rural districts. Moreover, whereas the extraction of raw silk from cocoons was formerly done by hand reeling as a remunerative sideline of farmers, today the much smaller volume of reeling is largely done by automatic reeling machines.

TABLE V-1. JAPANESE TEXTILE PRODUCTION, PREWAR PEAK, 1948, 1950, 1954-1956

Sources: Figures for 1948-55 from Textile Statistics Annual, Ministry of International Trade and Industry, Tokyo; raw silk figures from Ministry of Agriculture and Forestry, Raw Silk Bureau, Tokyo; 1956 figures from Economic Statistics Monthly, Bank of Japan, Statistical Department, Tokyo, August 1957, pp. 105-106.

TABLE V-2. RAW SILK SUPPLY AND DEMAND, JAPAN, 1934-36, 1947-1956

n.a. =not available.

a Prewar figures are from the Japan Textile Association, while postwar figures are computed from total deliveries and exports.

Source: Ministry of Agriculture and Forestry, Raw Silk Bureau, Tokyo.

In contrast with the lethargy of the natural fibers, synthetic textiles have been making remarkable headway.¹⁰ Rayon staple production in 1956 rose to 690 million pounds, up 360 percent from 1950. This figure far surpassed the totals for the United States and West Germany, thus making Japan the world’s largest producer. Operable equipment has been expanding steadily, so much so that in 1956 the Ministry of International Trade and Industry advised rayon producers to curtail reckless expansion plans.¹¹ On the other hand there is evidence from many sources that there is a steady trend, which amounts to a policy, to build up the position of synthetics at the expense of, and in replacement for, cotton and wool. The purpose is to reduce dependence on imported materials and the expenditure of foreign exchange which they require. Ways in which synthetics are being encouraged at the expense of cotton and wool include limitation of cotton textile production and of wool imports, government loans at favorable rates, special tax encouragements for expansion of synthetic capacity, and approval of many foreign technical assistance contracts in this field.¹²

In the five-year plan for economic development which the Japanese government announced at the end of 1955, the textile projections confirm the trend to synthetics. By 1960 it is obviously intended to reduce consumption of cotton both absolutely, and even more per capita. There is to be a small increase in wool and in silk but a major increase in synthetics. Cotton output is expected to decline from 50 to 39 percent of total textile output, while synthetics are expected to increase from 30 to 45 percent of the total. In textile exports a drop from 55 to 41 percent of the total is projected for cotton, while synthetic fibers are to rise from 35 to 50 percent.¹³

This program is an attempt by the Japanese to face the realities of the world situation and to conserve foreign exchange by holding down the importation of raw cotton. Yet restrictions on cotton textiles will further weaken one of Japan’s great industries, already hard hit by the loss of a good part of the world silk market. The total volume of textile production in Japan is now exceeded only by that of the United States. Japan is well ahead of Great Britain and India, the next two important countries, in total textile output. This position has been attained by a tremendous restoration of capacity in the decade since 1945. The present textile industry in Japan is substantially a new industry, largely rebuilt since World War II. For example, 75 percent of Japan’s cotton spindles are new (postwar); 91 percent of the spun rayon spindles and 78 percent of the worsted spindles are new, as is 81 percent of the rayon capacity.¹⁴

In order to check overproduction and bring about stability in the cotton spinning industry, the Law For Temporary Disposal of Textile Industry Equipment was promulgated in June 1956 and put in force on October 1, 1956. In anticipation of the effective date, desperate attempts had been made to install new spindles so that as many spindles as possible might be registered under this law, for unregistered equipment would not be allowed to operate. By October 1956, 9,020,000 spindles were registered, showing an increase of 850,000 over the previous year.¹⁵

In attempting to curtail cotton textiles and expand synthetics the Japanese are sacrificing a certain competitive advantage for an uncertain one. Despite the paucity of good studies and the plethora of claims and counterclaims, it seems reasonably clear that in cotton textiles the Japanese can undersell every other country. For example, a Canadian study of the Japanese textile industry makes the following comparisons with respect to 20s cotton yarn:¹⁶

In attempting to prove that the Japanese cotton textile producers’ costs are substantially above those of U.S. mills, the Japanese Ministry of Labor published the following table:¹⁷

COMPARATIVE LABOR PRODUCTIVITY IN COTTON SPINNING
(international comparison of working hours per 100 lbs. of product)

For 21s yarn Japan uses 13.7 working hours to produce 100 pounds while the United States produces the same amount with 6.59 working hours of labor. Now if one extends this demonstration a step further and multiplies the 13.7 working hours by 17 cents, the present average wage per hour in the Japanese cotton spinning industry, the cost in Japan of producing 100 pounds of 21s yarn comes to $2.32. If the 6.59 hours is multiplied by $1.00, the minimum hourly wage in the United States, the cost of producing 100 pounds of 21s cotton yarn comes to $6.59, almost three times the Japanese cost.

The London Economist noted a considerable differential between Japanese and British costs in cotton textile production. It declared:

There is an even greater difference between Japanese and British production costs today than there was before the war; the difference is probably over three times as great, and British costs are much more rigid than Japanese. Weekly average wages paid to United Kingdom cotton textile operatives are about 176 shillings (8,800 yen) for men and 107 shillings for women (5,650 yen). In Japan average monthly wages in textiles are 9,253 yen for men and 6,890 for women.¹⁸

Can such a comparative advantage be carried over to synthetic textiles, where labor costs are a smaller factor than in cotton and where Japanese knowhow is only recently acquired? This is a gamble which the Japanese are apparently prepared to take, for they realize that world markets for cotton textiles are diminishing.¹⁹ Over the last half century, the output of cotton goods, which in 1950 accounted for 74 percent of world textile consumption (as against 80 percent in 1900), has continued to increase; but the volume of goods entering into international trade has declined, as the following figures indicate:

WORLD COTTON TEXTILE PRODUCTION AND TRADE
(million square yards)

Source: The Cotton Board, Royal Exchange, Manchester.

The usual first step in the industrialization of any underdeveloped country is the establishment of a cotton textile industry and the imposition of protective tariffs to swaddle the infant industry. As they develop, countries tend to become quickly self-sufficient in cotton textiles.²⁰ Japan has now regained the number one status in the world cotton textile market; but world trade in cotton texiles was 10 percent less in 1955 than in 1950, although world production was substantially higher. Cotton textiles were one of the few major Japanese export commodities which failed to expand in volume between 1954 and 1956.²¹ As more and more nations become self-sufficient, the major producers—Japan, India, Great Britain, and the United States—compete for a declining total volume of textile trade.

THE HEAVY INDUSTRIES

In contrast with its overall advantageous cost position in textiles and other light goods, Japan is a high-cost producer of iron and steel, metal products, and machinery. The report on comparative international prices of export commodities published monthly by the Bank of Japan makes it possible to rank Japan’s leading industries according to their competitive price status. As Table V-3 shows, Japanese heavy industries appear to be higher-cost producers than their international competitors. For example, in June 1956 rolled steel bars were quoted at $124.20 per ton in Japan, $102.50 in the United States, $96 in the United Kingdom, $105 in Belgium, and $89.70 in West Germany. Thin steel plate was $140.80 per ton in Japan, $99.60 in the United States, $93.80 in the United Kingdom, and $109.50 in West Germany.²²

Of the total value of Japanese metal output in the postwar period, pig iron, steel ingot, and rolled steel formed nearly 50 percent, while non-ferrous metal ingot accounted for 8 percent and rolled copper for 12 percent. In 1956 Japan’s steel industry produced 5.7 million tons of pig iron, 11.1 million tons of steel ingot, and 7.8 million tons of ordinary rolled steel.²³ Japan’s output of crude steel at 11.1 million tons compared with U.S. production of 105 million tons, India’s output of 1.7 million, U.S.S.R. 48 million, United Kingdom 21 million, and West Germany 23 million tons in 1956.²⁴

Why are the Japanese higher-cost steel producers than other major nations? It is not due to the structure of the industry, for steel is one of the large-scale industries of Japan, with 77 percent of output concentrated in ten firms. Large-scale establishments (for all Japanese industry) employing more than 300 persons constituted only 0.4 percent of all Japanese firms, according to the latest Census of Manufactures, but the number of employees and the value of deliveries represented 26.9 percent and 43.8 percent, respectively, of the totals. Most steel firms would fall in this category. In contrast, establishments employing less than 300 persons, which constituted 99.6 percent of the total number of establishments, accounted for 56.2 percent of output. Small establishments employing less than four persons accounted for 56.8 percent of the total number of manufacturing establishments but for only 10.0 percent of the total labor force in manufacturing and 3.1 percent of the value of output.²⁵ In steel, on the other hand, the six biggest firms, Yawata, Fuji, Nippon Steel, Kawasaki, Sumitomo, and Kobe Steel, accounted for 75 percent of total steel ingot output.²⁶

TABLE V-3. JAPAN’S MAJOR EXPORT COMMODITIES LISTED IN ORDER OF THEIR PRICE ADVANTAGE ON THE WORLD MARKET

a The net foreign exchange earning ratio is computed by the Japanese Economic Planning Agency by taking the diffe ence between the FOB export price and the value of the imported content in a unit of product, and dividing by the FOB export price.

Source: Economic Survey of Asia and the Far East, 1955, U.N. Economic Commission for Asia and the Far East, p. 131.

Prior to the outbreak of the Korean War, Japanese steel products had been competitive with those of other nations because of subsidies granted by the government. The subsidies were removed completely just before the war broke out, and this factor, combined with the heavy demand caused by the war and the rise in the costs of imported raw materials as well as in shipping rates, caused prices of Japanese steel products to climb to levels 50 and 60 percent above those of other nations. Speculative activities on the part of dealers contributed to the price boom. The extent of the rise in Japanese prices may be seen in Table V-4-A. But, for a time, the Japanese were able to sell their steel and machinery despite its dearness, for such items were hard to obtain in the United States and western Europe. While Japanese steel prices have from time to time receded from the speculative levels of mid-1951, they have never regained their pre-Korean position (see Table V-4-B), and they remain somewhat higher than those of competitor countries.

TABLE V-4-A. COMPARISON OF DOMESTIC STEEL PRICES, JAPAN, BELGIUM, AND U.S., 1951

Source: Bank of Japan, Tokyo.

Three basic reasons suggest themselves to explain this situation, though doubtless there are others. First, at no time from 1946 to mid-1956 have operations in the iron and steel industry been at more than two-thirds of capacity. Only during the latter part of 1956 did operations begin to approach capacity. Thus the economies of large-scale operation could not be fully achieved (see Table IV-7). During 1955, when pig iron output was 5.2 million tons, capacity was 7.7 million. Ingot capacity was 11.5 million tons, output only 9.4 million.

TABLE V-4-B. COMPARISON OF DOMESTIC STEEL PRICES, JAPAN, BELGIUM, AND U.S., 1955-1957

a Quotations by Yawata Iron and Steel Co., Ltd.c Price of Thomas steel.

b Prices published by U.S. Steel Corporationd West Germany.

Source: Bank of Japan, Tokyo.

Secondly, a substantial part of the iron ore, coking coal, and scrap iron used in the Japanese steel industry must be imported. This means higher raw material and freight costs than those of competitor nations. As may be seen in the following table, Japanese pig iron producers paid more for coke than any of their major competitors and ranked second in the cost of iron ore and scrap.

PIG IRON PRODUCTION: COSTS OF MAJOR MATERIALS USED, 1954

Source: Iron and Steel World, Tekkokai, Tokyo, October 1955, p. 58.

By the end of 1955 the raw material cost per ton for Japanese pig iron had risen from $37.93 to $43.05.²⁷

Japan obtains 90 percent of its coking coal from the United States. As Table V-5 indicates, the freight cost exceeds the cost of the coal. Other sources, though cheaper, are limited. In the case of iron ore, 60 percent of Japan’s imports in 1955 came from lower-cost sources such as Malaya and the Philippines and 37 percent from India, Goa, the United States, and Canada, combined. Scrap has now become the most costly of all steel raw materials for Japan. The domestic price of special grade one scrap in Japan in 1957 was 18,500 yen per ton; in West Germany, 12,960 yen; in the United Kingdom, 7,920 yen; in the United States, 14,000 yen.²⁸ U. S. exports of iron and steel scrap to Japan rose from $8,000 in 1952 to $106 million in 1956.

The third factor, and perhaps the most important, in the Japanese cost situation was the lag in production techniques and the continued use of outmoded and obsolete machinery. Until 1950 the Japanese were far behind the advanced nations of Europe and America in steel-making techniques and equipment. Recognizing this, Japanese steel producers launched their first rehabilitation and rationalization program in 1951. It involved an expenditure of $345 million over four years, and by 1956 much had been achieved in the introduction of modern equipment and efficient techniques. According to the Tekko Renmei (Japan Iron and Steel Federation), labor productivity in the Japanese iron and steel industry rose from an index base of 100 in fiscal 1951 (April 1951 to March 1952) to 175 in October 1956. The average time required for manufacturing one ton of pig iron by blast furnace was reduced from 10.34 hours in 1951 to 7.74 hours in 1956.²⁹ In addition, a number of technical assistance contracts with foreign firms were signed, giving the leading Japanese companies the advantage of superior and newer overseas steel-making developments.³⁰

Yet despite these improvements in raw material treatment and use, installation of blooming mills, continuous hot and cold strip mills, adoption of the oxygen process for open hearths, converters, and electric furnaces, enlargement of blast furnace capacity, etc., all of which raised steel production per man-hour to higher than prewar levels, the Economic Planning Agency estimates that Japan still needs twice as many man-hours to turn out a ton of pig iron, or a ton of steel, as Britain. Thus, in spite of the relatively low wages of the Japanese, the labor cost per ton is substantially greater, both for pig iron and for steel, than it is in Britain. Aware of this, the leading steel companies, under the second rationalization program at the end of 1955 and during 1956, plunged into further rehabilitation and expansion programs so energetically that the Ministry of International Trade and Industry took “a very critical attitude toward these reckless expansion programs.”³¹

TABLE V-5. PRICES OF IRON AND STEEL RAW MATERIALS IMPORTED BY JAPAN, 1950-1956

a Prices, except American, are from the Yawata Iron and Steel Company's purchase contracts, which are based on cost and freight; insurance has been estimated to give a CIF figure.

b FOB prices based on average for all imports from United States into Japan; freight and insurance estimated.

c No shipments received.

d Shipments received but prices not available.

Source: Research Section of the Yawata Iron and Steel Company.

TABLE V-5 continued

a Prices are for iron ore actually imported by the Yawata Iron and Steel Company.

b Unavailable.

Source: Research Section of the Yawata Iron and Steel Company.

Naturally, in the absence of subsidies, higher steel prices reflect themselves in higher costs in the steel-using industries such as machinery and equipment, metal products, rolling stock, etc. Paradoxically, therefore, it is just those Japanese industries which have the best hope of expanding exports that are high-cost producers when compared with international competitors, while the older, lighter consumer goods industries, more of whose products it may be difficult in the future to sell abroad because of the growth of indigenous industry in underdeveloped countries, are lower-cost producers.

Two examples of the way in which Japan was outbid in the heavy equipment field, in the first instance by West Germany and in the second instance by Great Britain, may be seen in the following tabulation:

RESULTS OF INTERNATIONAL BIDS

Source: Japanese Machine Industries Association, Tokyo.

Even in one of the most active sectors of the machinery industry—shipbuilding, where the Japanese have staged a remarkable comeback to attain first place in world ship production—costs of production are higher than those of competitors. For comparable freighters, Japanese costs in steel materials and engines in 1954 were 34 percent higher than the British, and the total cost of the ship was made competitive only by the fact that the construction fees the Japanese charged were but 39 percent of the British fees.

Yet despite the fact that the machinery industry (including shipbuilding) is a high-cost, relatively inefficient branch, it has had one of the best performance records of any part of Japanese industry.³² Its production index (1934-36 = 100) had by December 1956 reached four times the prewar figure. The index for machinery (413) was 165 points above the index for total manufacturing (248) and stood in marked contrast with Japan’s most efficient industry, textiles (109.3).³³ Largely responsible for this strong showing were the new peaks in equipment spending recorded for most areas of Japanese industry in 1956. According to an official estimate, industrial equipment expenditures in 1956 were up 124 percent over 1955 in the building industry, 117 percent in iron and steel, 94 percent in chemicals, 87 percent in petroleum, 62 percent in paper and pulp, etc.³⁴

TABLE V-6. EFFECTS OF RATIONALIZATION ON SHIPBUILDING IN JAPAN, 1949 TO 1957
(MEDIUM SPEED FREIGHTERS)

Source:Ministry of Transportation, Tokyo.

This large expansion has afforded some sectors of the Japanese machinery industry an opportunity to rationalize, re-equip, and introduce new processes. For example, in shipbuilding the introduction of electric welding and improvements in engine building enabled shipbuilders to hold costs down. As Table V-6 reveals, despite the fact that the cost of steel plates was, in 1957, about 3¹/2 times the 1949 level and wages had almost tripled, the yards were able to hold the increase in the cost of freighters to only 71 percent over 1949, by means of a 29 percent reduction in the amount of steel used and a 48 percent reduction in man-hours required.

Other industries, utilizing the 1955-56 expansion, have undertaken rationalization and cost reduction measures. In the production of ball bearings, for example, the use of steel per ton of ballbearing production has been reduced by 16 percent, the use of heavy oil by 23 percent, and the use of electric power by 32 percent. In the electric power industry the loss of power in transmission has been reduced by 20 percent.³⁵ The Japan Light Metal Association reports that the rationalization measures undertaken by the Japanese aluminum refineries since 1951 have succeeded in reducing costs substantially. Labor requirements for the production of a ton of aluminum have been reduced from 12.1 working days to 8.8 working days. Furthermore, the refineries now need less alumina to produce a ton of aluminum. Bauxite requirements have been reduced from 2.24 tons to 2.11 tons; cryolite from 84 kilograms to 50 kilograms; and anode paste from 650 kilograms to 580 kilograms. The consumption of electricity per ton of aluminum has been reduced from 22,000 kwh. to 19,000 kwh., mainly because of the increased current capacity of electrolytic furnaces.

To further such developments a Productivity Center was established in Japan in 1955, with the assistance of the U.S. International Cooperation Administration under an agreement signed in April 1955.³⁶ Furthermore, the preferential treatment in taxation provided for by the Rationalization Promotion Law, the financing undertaken by the Japan Development Bank, and other measures, have done much toward the modernization of production machinery. Certain industries have been singled out for special treatment. In the case of coal mining, for example, a sick industry, the Law Governing Temporary Measures for Rationalization was passed in 1955, providing, among other things, for closing of inefficient mines, restriction on opening others or sinking new shafts, etc.³⁷ Some have criticized measures of this type as undue government interference,³⁸ but they indicate the growing Japanese concern with out-of-line costs and reflect the desire of responsible leaders to make Japanese industries competitive.

There are, however, a number of limiting factors which impede Japan’s efforts at restructuring its industrial processes.

In the first place, there is a basic maladjustment in Japan’s industrial structure in that the small-scale pre-modern sector is disproportionate to the large-scale modern sector. For example, according to the latest Census of Manufactures, firms employing less than 30 persons were 93.7 percent of the total number of establishments, and employed 41.5 percent of those working in manufacturing, but were responsible for only 22.3 percent of the value of output. Firms employing 30 or more persons were but 6.3 percent of the total number but had 58.5 percent of all employees and were responsible for 57.7 percent of total manufacturing output (see Table V-7). Obviously the ability to modernize is largely confined to the larger firms—some 6 percent of all Japanese manufacturing enterprises—since the other firms are too small to attract capital or to have access to newer techniques and newer equipment.³⁹ The ability to attract foreign resources, techniques, and capital is probably confined to the 1,728 firms (0.4 percent of the total) which employ 300 or more workers (26.9 percent of total employees) and turn out 43.8 percent of the total product.⁴⁰

TABLE V-7. JAPANESE MANUFACTURING ENTERPRISES BY SCALE OF ESTABLISHMENT, 1955

Source: Census of Manufactures, 1955, Ministry of International Trade and Industry, Tokyo.

Secondly, power resources have now become a bottleneck. Energy sources are reaching their limit and energy costs have risen significantly. The notion that hydroelectric power is cheap and abundantly available in Japan is now out-dated. Today there are few places in Japan where more hydroelectric power can be developed economically. In the last few years thermal power production has come to account for a large percentage of power development, reversing the subordinate position it had previously occupied vis-à-vis hydroelectric power. As a result, increased demands have been placed upon the sick coal industry, whose capacity for expansion has been relatively inelastic.⁴¹

The last decade in Japan therefore has seen two significant developments: (a) growing reliance on oil as an energy fuel and (b) greater dependence on the supply of energy resources from abroad. This is despite the fact that there has been a 40 percent expansion in the supply of electric power in Japan over the last decade.⁴² In fiscal 1956, investment in the power industry amounted to one-third of total private plant and capital goods investment.

Of the gross volume of energy used in Japan, the ratio of imported energy, which was 10.6 percent in fiscal 1951, rose rapidly to 22.8 percent in fiscal 1956.⁴³ Petroleum imports, which several years back were comparatively low on the import list, rose to second place in fiscal 1956, second only to raw cotton. The growth in the use of petroleum may be seen from the following compilation:

JAPAN: COMPOSITION OF ENERGY DEMANDS, 1950-1956
(percent of total)

Source: Ministry of International Trade and Industry, Tokyo.

According to the long-range forecast recently submitted to the government by the Industrial Rationalization Council, the share of coal in the total energy supply, which stood at 46.0 percent (Council’s figure) in fiscal 1955, will dwindle to 38.3 percent in fiscal 1975 and that of water power from 30.1 to 24.9 percent, while the ratio for petroleum will leap sharply from 16.2 percent to 32.0 percent.⁴⁴

The expected increase in the share of imported energy sources in Japan’s total power consumption may be gauged from the following:

JAPAN: ENERGY, DOMESTIC AND IMPORTED, 1951-1975
(percent of total)

Source: “Prospects of Demand and Supply of Energy 20 Years Hence,” Ministry of International Trade and Industry, Tokyo.

It is thus clear that the increased supply of coal and electric power from domestic sources has not kept pace with industrial expansion. With the prospect of enlarging the production of coal apparently restricted, owing to economic and technical handicaps, and the outlook for new electric power development projects not particularly hopeful, also for economic reasons (although elaborate plans have been and are being formulated), Japan will probably have to depend on coal and petroleum imports to supplement its own energy supplies, if further industrial expansion is to take place. Atomic power generation looms as a dim future hope, but the capital costs are huge and Japan’s 1970 target of 3.5 million kw. from this source seems optimistic.⁴⁵

The third limiting factor is that Japan’s dependence on imports seems to be increasing rather than decreasing. Imports in fiscal 1956 were $1,016 million, or 39 percent more than in fiscal 1955. Imports for the calendar year 1957 were 32 percent greater than in 1956. One survey declares:

For postwar days, the dependency on imports had been expected to decrease gradually in view of the further development of the heavy and chemical industries and the increased weight of the non-goods producing industries such as the service business as a result of the increased national income. In reality, however, the dependency increased. For instance in fiscal 1953 the rate of dependency was 15.4 percent as against the previous estimation of 12.2 percent, and in fiscal 1956 it rose to 15.7 percent, clearly indicating a gap between the plan and the result.⁴⁶

Another study states:

The ratio of the value of imports to the gross national product increased from 11.2 percent in fiscal 1955 to 14.6 percent in fiscal 1956. Thus, the import increase in fiscal 1956 contained the short-term contributing factor of accumulation of raw material inventories but also the middle or long range factors of the vast expansion of the scale of the national economy and the increase in the degree of dependence on imports due to the shortage of domestic resources. This fact should not be overlooked.⁴⁷

These three limiting factors—industrial maladjustment, power shortage, and growing dependence on imports—among others, make more difficult the transformation of Japan’s industrial structure which is now under way, and which must be carried out if Japanese exports are to make their way in the world market in the face of changes brought on by growing industrialization in many countries over the past decade.