This paper explores Japan's industrialization from the perspective of "indigenous development", focusing on what may be identified as "traditional" or "indigenous" factors. First, we describe the typical indigenous development process by looking at a case study of one rural weaving industry. After that, we investigate the functions of various institutions supporting "indigenous development" in modern Japan. Through these, we conclude that the peculiar logic functioning on the supply side of the developmental trajectory was the key to understand the existence of "indigenous development" in Japan's industrialization process.

The existence of the household economy practicing a "rational" labour allocation strategy among household members within the framework of the traditional institution of the ie regulated behavior on the labour side. The measures and institutions run by the central and local governments supported the organization and market adaptation on the management side. Regional society also functioned to stabilize the relation between labour and management. All these factors worked to construct the system. Since each of the factors, including the intensity of labour inputs with relative low wages within peasant and small business households, and the benefits from a division of labour generated by this style of organization, contributed to competitiveness in the market, this system could have functioned as the basis of indigenous development.