The Japanese aircraft industry, which operated on a very small scale before World
War II, became Japan's largest manufacturing industry by the end of the war. In this
paper, we explore the causes of the growth of the aircraft industry during this time
by focusing on the No. 5 Works of Mitsubishi Heavy Industries Co. We find that
during the war, the supply of basic inputs increased substantially: the labor force,
equipment and "machinery parts" were in sufficient supply, and none of them were
binding constraints on production. A binding constraint existed in the supply of
"special parts." Put differently, aircraft production expanded as the supply of special
parts increased. This increase in the supply of special parts and even faster growth
in the supply of machinery parts came about through the expansion of supplier
networks in terms of both the number of suppliers and the geographical area in
which they were located. These findings imply that outsourcing played a key role in
the rise of aircraft production in wartime Japan.
|