Breaking Open the Closed Nature of Japanese Forestry

Abstract

We have applied the system-wide approach, a theory developed by the economist H. Theil, to input-output analysis to demonstrate the closed nature of forestry in Japan. We have also advocated the necessity of opening up the forestry industry in order to optimize production (minimize costs). Specifically, with the methodology employed here, we calculated input coefficients for Japanese forestry using input-output tables. We compared actual input coefficients with the input coefficients calculated to achieve optimal production. The results revealed that intermediate product transactions among forestry industry members were about 12% above the amount required for forestry to achieve optimal production, while intermediate product transactions with other industries were about 11% too low. This means that forest-related commissioned projects are carried out primarily by forestry players, so work is not being allocated to other industries. The results lead us to the conclusion that forestry in Japan is closed and that commissioned projects should be allocated to other sectors. We show compelling examples from prior research on opening up forestry to the construction industry and nonprofit organizations. Opening forestry projects to other sectors will improve forestry technologies in those sectors and lead to technological innovation in Japanese forestry.