Raw cotton markets, industrial strategies, and trade organisation in India and Japan, c. 1850-1940

This paper examines differences in access to raw cotton markets between India and Japan in the late nineteenth and early twentieth centuries. It argues that this differential access shaped the production strategies of their domestic textile industries, which, in turn, contributed to divergent outcomes in the long-run development of the same. In the period under study, raw cotton comprised 75–85 per cent of the total costs of production of yarn and 20–40 per cent of the total costs of finished textiles. The significance of access to the appropriate quality of raw cotton – expressed by its length, grade, and character – had more substantive implications than value shares suggest. Longer-stapled varieties of cotton were priced higher in global markets but would have compensated for these costs with gains in productivity, affecting the choice of longer-run technological adoption. These factors meant that textile industries with stable and cost-effective access to appropriate quality raw cotton were better equipped to deal with the vagaries and dynamism of competition that had by the end of the nineteenth century become entrenched in the global textile market. As different regions of the world specialised in the production of different cotton varieties, cotton manufacturing rested on a trade and commercial web that linked agrarian hinterlands with industrial centres of production. Ultimately, industrial textile production was reliant on the form and strength of trade organisation. I thus argue that this inter-relation between raw cotton markets, industrial strategies, and trade organisation was a significant factor in the differences in long-run development of the textile industries in India and Japan.