Impact of natural disasters on industrial agglomeration: The case of the Great Kantō Earthquake in 1923

Abstract

The Great Kantō Earthquake in 1923 did enormous damage to industries in Tokyo Prefecture. Around 40% of the buildings in Tokyo Prefecture were completely burnt or destroyed. In this paper, we investigate whether this temporary shock had a persistent impact on the spatial distribution of industries in Tokyo, using ward-and county-level panel data for industrial workers. It was found that while the earthquake caused mean shifts in the shares and numbers of workers, these mean shifts disappeared by the early 1930s. On the other hand, the earthquake caused shifts in the trends in the share and number of workers. The combined effects of these mean shifts and trend shifts were persistent for both the shares and the numbers of workers. The earthquake caused especially serious damage to the old industrial clusters in the southeast of Tokyo, and provided an opportunity for newly developing industrial clusters in non-damaged areas to take over the market. Further, the people and the local governments in non-damaged areas made an effort to take advantage of this opportunity to attract factories. Arguably, these forces made the impact of the earthquake on the spatial distribution of industry persistent.

Urban redevelopment and residential location choice: Evidence from a major earthquake in Japan

“…We find that the population organization across the municipalities was persistently altered by the shock, despite the population size as a whole was robust to the shock. Imaizumi et al () focus on a major earthquake, which is closely correlated with our study. They find that the 1923 Kanto earthquake in Japan caused serious damage to the old industrial clusters in southeast Tokyo and, in turn, provided an opportunity for newly developing industrial clusters in nondamaged areas to take over the market.…”

Shaking Up the Equilibrium: Natural Disasters, Economic Activity, and Immigration

“…Besides the casualties, more than 225,000 people became homeless and 28,000 buildings were 13 Belloc et al (2016) demonstrate that earthquakes retarded institutional transition from autocratic regimes to self-government in Italian cities between 1000 and 1300. Imaizumi, Ito, and Okazaki (2016) find that the Great Kanto Earthquake in 1923 had long-lasting e↵ects on the spatial distribution of manufacturing activities within the Tokyo Prefecture. destroyed with an estimated economic damage of 500 million 1906 U.S. dollars (NOAA, 1972;USGS, 2012).…”

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

“…The total number of dead and missing is estimated to be over 100,000, and the destruction of assets is believed to be around 35% of Japan's GNP in 1922 (Imaizumi, et al 2016). Indeed, it was the most serious natural disaster that Japan had experienced up to the present date.…”

“…7 The business report of Furukawa Electric stated, "In reconstructing the damaged plants, we are not only recovering them but also completely improving the 7 The Great Kanto Earthquake had a persistent impact on the spatial distribution of industries around Tokyo. While the industrial agglomeration in the eastern part of Tokyo City including Honjo Ward relatively declined, a new industrial agglomeration developed in the southwestern part of Tokyo (Imaizumi, et al 2016). The closure of Honjo Plant and the reconstruction of the Yokohama Plant by Furukawa Electric is a typical case of this shift of industrial agglomeration.…”

“…For example, the Lisbon Earthquake in 1755 not only changed prices and wages, but also led to a policy reform toward mercantilist type policies, and thereby improved the long-run performance of the Portuguese economy (Pereira, 2009). For Japan, the Great Kanto Earthquake in 1923 changed the spatial distribution of industries and resulted in the development of a new industrial agglomeration (Imaizumi, et al 2016). Thus, while the Lisbon Earthquake and the Great Kanto Earthquake were very damaging disasters, they also arguably had positive long-run impacts on the economies.…”