IDEAS home Printed from https://ideas.repec.org/a/sls/ipmsls/v40y20213.html
   My bibliography  Save this article

The Causes of Japan’s Economic Slowdown: An Analysis Based on the Japan Industrial Productivity Database

Author

Listed:
  • Kyoji Fukao
  • YoungGak Kim
  • HyeogUg Kwon

Abstract

Using the Japan Industrial Productivity Database (JIP) and the EU KLEMS database 2017, we compare the sources of economic growth of Japan, the United States, Germany, France, and the U.K. for the period 1995–2015 using growth accounting. We find that the reasons why Japan’s economic growth during the 2005–2015 period was much slower than that of the other major economies are the decline in the working-age population and sluggish investment in capital services. Among the five countries, Japan was the only one whose growth rate of the capital stock was lower than the steady state growth rate. Another reason for the slowdown in Japan’s economic growth in 2005–2015 was the decline in TFP growth, which was caused by a drop in productivity growth in a small number of industries, including electronic data processing machines, electricity, and wholesale trade.

Suggested Citation

  • Kyoji Fukao & YoungGak Kim & HyeogUg Kwon, 2021. "The Causes of Japan’s Economic Slowdown: An Analysis Based on the Japan Industrial Productivity Database," International Productivity Monitor, Centre for the Study of Living Standards, vol. 40, pages 56-88, Spring.
    • Handle: RePEc:sls:ipmsls:v:40:y:2021:3
    as

    Download full text from publisher

    File URL: http://www.csls.ca/ipm/40/IPM_40_Fukao.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Belderbos, Rene & Ikeuchi, Kenta & Fukao, Kyoji & Kim, Young Gak & Kwon, Hyeog Ug, 2013. "Plant Productivity Dynamics and Private and Public R&D Spillovers: Technological, Geographic and Relational Proximity," CEI Working Paper Series 2013-05, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    2. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters, in: Paolo Onofri (ed.), The Economics of an Ageing Population, chapter 2, Edward Elgar Publishing.
    3. Kyoji Fukao & Tsutomu Miyagawa & Kentaro Mukai & Yukio Shinoda & Konomi Tonogi, 2009. "Intangible Investment In Japan: Measurement And Contribution To Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 717-736, September.
    4. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    5. Rene Belderbos & Kyoji Fukao & Kenta Ikeuchi & Young Gak Kim & Hyeog Ug Kwon, 2015. "Buyers, suppliers, and R&D spillovers," Working Papers of Department of Management, Strategy and Innovation, Leuven 502593, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    6. Paprzycki,Ralph & Fukao,Kyoji, 2012. "Foreign Direct Investment in Japan," Cambridge Books, Cambridge University Press, number 9781107411289, September.
    7. Kyoji FUKAO & Taisuke KAMEDA & Kota NAKAMURA & Ryoichi NAMBA & Masahiro SATO, 2017. "Measurement of Deflators and Real Value Added in the Service Sector," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 194, pages 9-44, May.
    8. Germán Gutiérrez & Thomas Philippon, 2017. "Investmentless Growth: An Empirical Investigation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 89-190.
    9. Fukao, Kyoji & Ikeuchi, Kenta & Kim, YoungGak & Kwon, Hyeog Ug, 2016. "Why was Japan left behind in the ICT revolution?," Telecommunications Policy, Elsevier, vol. 40(5), pages 432-449.
    10. Kim, YoungGak & Fukao, Kyoji & Makino, Tatsuji, 2010. "The Structural Causes of Japan's “Two Lost Decades”," Economic Review, Hitotsubashi University, vol. 61(3), pages 237-260, July.
    11. Martin Neil Baily & Barry P. Bosworth & Siddhi Doshi, 2020. "Lessons from Productivity Comparisons of Germany, Japan, and the United States," International Productivity Monitor, Centre for the Study of Living Standards, vol. 38, pages 81-103, Spring.
    12. Kyoji Fukao, 2013. "Explaining Japan's Unproductive Two Decades," Asian Economic Policy Review, Japan Center for Economic Research, vol. 8(2), pages 193-213, December.
    13. Kyoji Fukao & Tsutomu Miyagawa & Hak Kil Pyo & Keun Hee Rhee, 2012. "Estimates of Total Factor Productivity, the Contribution of ICT, and Resource Reallocation Effects in Japan and Korea," Chapters, in: Matilde Mas & Robert Stehrer (ed.), Industrial Productivity in Europe, chapter 9, Edward Elgar Publishing.
    14. FUKAO Kyoji & KIM YoungGak & KWON Hyeog Ug & IKEUCHI Kenta, 2021. "Business Dynamism and Productivity Growth under Abenomics: An Empirical Analysis Based on Micro Data from Japan's Economic Census for Business Activity (Japanese)," Discussion Papers (Japanese) 21015, Research Institute of Economy, Trade and Industry (RIETI).
    15. FUKAO Kyoji & HAMAGATA Sumio & INUI Tomohiko & ITO Keiko & Hyeog Ug KWON & MAKINO Tatsuji & MIYAGAWA Tsutomu & NAKANISHI Yasuo & TOKUI Joji, 2007. "Estimation Procedures and TFP Analysis of the JIP Database 2006 Provisional Version," Discussion papers 07003, Research Institute of Economy, Trade and Industry (RIETI).
    16. Matilde Mas & Robert Stehrer (ed.), 2012. "Industrial Productivity in Europe," Books, Edward Elgar Publishing, number 14369.
    17. Hoshi,Takeo & Lipscy,Phillip Y. (ed.), 2021. "The Political Economy of the Abe Government and Abenomics Reforms," Cambridge Books, Cambridge University Press, number 9781108843959, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Betts, Caroline, 2021. "Accounting for Japan's Lost Score," MPRA Paper 109285, University Library of Munich, Germany.
    2. René BELDERBOS & IKEUCHI Kenta & FUKAO Kyoji & KIM Young Gak & KWON Hyeog Ug, 2022. "What Do R&D Spillovers from Universities and Firms Contribute to Productivity? Plant level productivity and technological and geographic proximity in Japan," Discussion papers 22106, Research Institute of Economy, Trade and Industry (RIETI).
    3. Ichiro Fukunaga & Yoshihiko Hogen & Yojiro Ito & Kenji Kanai & Satoshi Tsuchida, 2024. "Potential Growth in Japan: Issues on Its Relationship with Prices and Wages," Bank of Japan Working Paper Series 24-E-16, Bank of Japan.
    4. David, Tao Liang & Harry, X Wu & Fukao, Kyoji, 2022. "Estimation of China's investment in ICT assets and accumulated ICT capital stock," IDE Discussion Papers 833, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. FUKAO Kyoji & IKEUCHI Kenta & KWON Hyeog Ug & YoungGak KIM & MAKINO Tatsuji & TAKIZAWA Miho, 2015. "Lessons from Japan's Secular Stagnation," Discussion papers 15124, Research Institute of Economy, Trade and Industry (RIETI).
    2. Fukao, Kyoji, 2017. "Secular Stagnation and the Labor Market in Japan," SSPJ Discussion Paper Series DP17-2, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.
    3. Kim, YoungGak & Kwon, HyeogUg & Fukao, Kyoji, 2021. "The Causes of Japan's Economic Slowdown and Necessary Policies: An Analysis Based on the Japan Industrial Productivity Database 2018," SSPJ Discussion Paper Series DP20-012, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.
    4. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    5. Fukao, Kyoji & 深尾, 京司, 2017. "Secular Stagnation and the Labor Market in Japan," SSPJ Discussion Paper Series DP17-002, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.
    6. Tsutomu Miyagawa & Miho Takizawa & Konomi Tonogi, 2017. "Can Intangible Investments Ease Declining Rates of Return on Capital in Japan?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 33, pages 114-127, Fall.
    7. Kyoji Fukao, 2013. "Explaining Japan's Unproductive Two Decades," Asian Economic Policy Review, Japan Center for Economic Research, vol. 8(2), pages 193-213, December.
    8. Randall Jones & Yosuke Jin, 2017. "Boosting productivity for inclusive growth in Japan," OECD Economics Department Working Papers 1414, OECD Publishing.
    9. Fukao, Kyoji & Ikeuchi, Kenta & Kim, YoungGak & Kwon, Hyeog Ug, 2016. "Why was Japan left behind in the ICT revolution?," Telecommunications Policy, Elsevier, vol. 40(5), pages 432-449.
    10. W Max Corden & Sisira Jayasuriya, 2016. "The Japanese macroeconomic mystery," Departmental Working Papers 2016-03, The Australian National University, Arndt-Corden Department of Economics.
    11. Akira Kohsaka & Jun-ichi Shinkai, 2013. "It's Not Structural Change, but Domestic Demand: Productivity Growth in Japan," OSIPP Discussion Paper 13E005, Osaka School of International Public Policy, Osaka University.
    12. DUERNECKER Georg & SANCHEZ MARTINEZ Miguel, 2021. "Structural change and productivity growth in the European Union: Past, present and future," JRC Working Papers on Territorial Modelling and Analysis 2021-09, Joint Research Centre.
    13. MIYAGAWA Tsutomu & TAKIZAWA Miho & EDAMURA Kazuma, 2013. "Does the Stock Market Evaluate Intangible Assets? An empirical analysis using data of listed firms in Japan," Discussion papers 13052, Research Institute of Economy, Trade and Industry (RIETI).
    14. Masahito Ambashi, 2017. "Competition Effects and Industrial Productivity: Lessons from Japanese Industry," Asian Economic Papers, MIT Press, vol. 16(3), pages 212-249, Fall.
    15. Christian Osterhold, 2018. "Fear the walking dead: zombie firms, spillovers and exit barriers," Working Papers w201811, Banco de Portugal, Economics and Research Department.
    16. Betts, Caroline, 2021. "How many (more) lost decades? The great productivity slowdown in Japan," MPRA Paper 106503, University Library of Munich, Germany.
    17. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
    18. Chad Syverson, 2017. "Challenges to Mismeasurement Explanations for the US Productivity Slowdown," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 165-186, Spring.
    19. Carolina Hintzmann & Josep Lladós-Masllorens & Raul Ramos, 2021. "Intangible Assets and Labor Productivity Growth," Economies, MDPI, vol. 9(2), pages 1-21, May.
    20. Takuji Fueki & Takuji Kawamoto, 2008. "Does Information Technology Raise Japan's Productivity?," Bank of Japan Working Paper Series 08-E-8, Bank of Japan.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sls:ipmsls:v:40:y:2021:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CSLS (email available below). General contact details of provider: https://edirc.repec.org/data/cslssca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.