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Creative Destruction of Industries: Yokohama City in the Great Kanto Earthquake, 1923

  • Tetsuji Okazaki (a1), Toshihiro Okubo (a2) and Eric Strobl (a3)
Abstract

The Great Kanto Earthquake occurred on 1 September 1923 and inflicted serious damage on Yokohama City. About 90 percent of the factories in Yokohama City were burnt down or completely destroyed. However, these manufacturing industries appear to have swiftly recovered in the aftermath of the damage. This article investigates the role of creative destruction due to the Great Kanto Earthquake. Using firm-level data on capital (horsepower of motors) before and after the earthquake, we find substantial creative destruction, that is, upgrade of machine technology and/or survival of efficient firms. We find further collaborating evidence of this at the prefecture level.

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Footnotes
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We would like to thank participants at seminars in Keio, Hitotsubashi, and Sophia Universities. Okubo acknowledges financial support from the Japan Society for the Promotion of Science through the Grant-in-Aid for Scientific Research (16K03652, 26220503). We thank Dr. Tsutomu Takahama (Kozo Keikaku Engineering Inc.) for providing the damage data in Yokohama City. We appreciate two anonymous referees for their helpful comments.

Footnotes
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