Still, there are four distinctive features of Japan 's development through industrialization that merit discussion:
The proto-industrial base
Japan 's agricultural productivity was high enough to sustain substantial craft (proto-industrial) production in both rural and urban areas of the country prior to industrialization. Investment-led growth
Domestic investment in industry and infrastructure was the driving force behind growth in Japanese output. Both private and public sectors invested in infrastructure, national and local governments serving as coordinating agents for infrastructure build-up. * Investment in manufacturing capacity was largely left to the private sector. * Rising domestic savings made increasing capital accumulation possible. * Japanese growth was investment-led, not export-led.
Total factor productivity growth -- achieving more output per unit of input -- was rapid.
On the supply side, total factor productivity growth was extremely important. Scale economies -- the reduction in per unit costs due to increased levels of output -- contributed to total factor productivity growth. Scale economies existed due to geographic concentration, to growth of the national economy, and to growth in the output of individual companies. In addition, companies moved down the "learning curve," reducing unit costs as their cumulative output rose and demand for their product soared.
The social capacity for importing and adapting foreign technology improved and this contributed to total factor productivity growth: * At
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