A test of the escape from the persistence of backwardness

A model was constructed and estimated for the Japanese economy from 1872 to 1937. Although the model is limited in scope due to limited data availability, it is capable of testing the escape from the trap hypothesis of which Japan is a popular candidate. An examination of the basic difference equation in all periods indicated that Japan did escape the trap during the period 1873–74. Care should be taken in evaluating the evidence. Clearly, the trap is not verified within the range of the data. Consequently, what appears to be evidence of an escape from the trap is suspicious. An economy could tend to move away from an unstable equilibrium level of per capita income without moving toward a low level stable equilibrium level of per capita income when the rate of change in per capita income is negative. But the evidence does support a turning point in Japan's efforts to develop. After 1873–74 Japan was able to achieve a sustained rise in per capita income. The results of this study identify an escape from a persistence of backwardness in terms of per capita income regardless of whether or not that escape was one from a low level equilibrium trap.