ABSTRACT
This article analyses the differential patterns of evolution in Chinese and Japanese silk-reeling industries during the latter half of the nineteenth century. It shows that, while Japanese exports of raw silk overall grew the fastest, the Guangdong region in China also expanded rapidly whereas the Lower Yangzi region lagged behind in machine-reeling production. This article applies a simple partial equilibrium framework to link the differential rates of growth with patterns of technological borrowing and economy-wide transaction costs. Through a historical narrative, the article argues that the contrasting performance in the two countries’ silk exports is directly linked to the differential rates of decline in barriers to learning and transaction costs, which in turn were intimately associated with divergent political and economic changes taking place in Japan and China in the late nineteenth and early twentieth centuries.
