Industry Structure as a Competitive Advantage: The History of Japan's Post-war Steel Industry

This article examines the role of the Japanese government in the development of Japan's post-war steel industry. It argues that the Japanese government's industrial policies facilitated the rapid growth and success of Japanese steel companies in the world market. During the early post-war years, the government instituted a set of comprehensive policies which constrained the supply of steel in Japan's market and contributed to the development of large-scale plants and the full exploitation of the economies of scale in steel manufacturing. The Japanese steel industry's sizable cost advantage, of course, derived from more than government policies alone. But, as this article will argue, through the Ministry of Trade and Industry, the Japanese government used its power to exploit the economics of capital-intensive industries and accelerate the formation of an efficient steel oligopoly in Japan.