3 - Tokugawa Japan and the Foundations of Modern Economic Growth in Asia

Summary

After the demise of the manorial system in the fifteenth and sixteenth centuries, the Shogunate and lords established exclusive property rights of farming households by thorough cadastral surveys in the seventeenth century and protected them against bystanders thereafter. The unit to which property rights were granted was the stem family. The property rights protection had owner farmers accept a high land:tax ratio. The high state capacity of early modern Japan enabled the Shogunate and lords to have fiscal room to invest in water control, urban construction, large-scale reclamation, and the judicial system in the seventeenth century. The property rights protection also provided farming households with incentives to improve productivity by the enhancement of intense farming, which led to an acceleration of growth in per capita GDP from the eighteenth century onwards. The land tax was mostly fixed in the seventeenth century when the state granted property rights, the productivity improvement in the eighteenth and nineteenth centuries was barely taxed, and hence state capacity declined in the eighteenth and nineteenth centuries. The isolationist policy of the Shogunate blocked knowledge transfer from the West. Still, the state capacity of Shogunate Japan was substantially higher than those of other emerging economies in the nineteenth century and bequeathed tax revenue to the Meiji Imperial Government for modernization through knowledge transfer from the West from the late nineteenth century onwards.