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Sectoral Productivity and Economic Growth in Japan, 1970-98: An Empirical Analysis Based on the JIP Database

In: Growth and Productivity in East Asia

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  • Kyoji Fukao
  • Tomohiko Inui
  • Hiroki Kawai
  • Tsutomu Miyagawa

Abstract

In this paper we conducted a detailed analysis of Japan's TFP growth by making use of the Japan Industrial Productivity Database (the JIP Database) which we have recently completed. We got the following results. 1.After taking account of the quality of labor and the capacity utilization rate we found the decline in TFP growth at the macro-level from the 1980s to the 1990s not to be so great. Hayashi and Prescott (2002) seem to have overestimated the size of the TFP growth decline. 2.On the other hand, there was a substantial change in the pattern of sectoral TFP growth. The slowdown in TFP growth mainly occurred in the manufacturing sector. In contrast, TFP growth in the non-manufacturing sectors accelerated during the 1990s. 3.In the 1990s, substantial deregulations were accomplished in non-manufacturing industries, especially in communication, wholesale and retail trade, and finance, insurance and real estate, and this change seems to have contributed to the acceleration of TFP growth in these industries. But we should also note that, compared with other developed countries, Japan's TFP growth in the non-manufacturing sector is still quite low. 4.Regarding the manufacturing sector in the 1990s, the following three factors seem to have contributed to the low level of TFP growth. First, new entries were very limited. Secondly, the exit effect was negative, that is, the average TFP level of exiting firms was higher than that of staying firms. Thirdly, the reallocation effect of resources was small.
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Suggested Citation

  • Kyoji Fukao & Tomohiko Inui & Hiroki Kawai & Tsutomu Miyagawa, 2004. "Sectoral Productivity and Economic Growth in Japan, 1970-98: An Empirical Analysis Based on the JIP Database," NBER Chapters, in: Growth and Productivity in East Asia, pages 177-228, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:10748
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    1. Kyoji Fukao & Tsutomu Miyagawa & Hiroki Kawai & Tomohiko Inui & Ximing Yue & Yoshinobu Okumoto & Masakatu Nakamura & Masahide Hayashida & Kazuyoshi Nakata & Kensho Hashikawa & Naoki Okumura & Yukako M, 2003. "Sectoral Productivity and Economic Gwowth in Japan : 1970-98 (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 170, pages 3-415, June.
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    13. Ito, Keiko & Fukao, Kyoji, 2005. "Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996," Journal of the Japanese and International Economies, Elsevier, vol. 19(3), pages 414-455, September.
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    16. Kyoji Fukao & Kiyohiko Nishimura & Qing-Yuan Sui & Masayo Tomiyama, 2005. "Japanese Banks’ monitoring activities and the performance of borrower firms: 1981–1996," International Economics and Economic Policy, Springer, vol. 2(4), pages 337-362, December.
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    Cited by:

    1. Keiko Ito & Kyoji Fukao, 2005. "Physical and Human Capital Deepening and New Trade Patterns in Japan," NBER Chapters, in: International Trade in East Asia, pages 7-52, National Bureau of Economic Research, Inc.
    2. Jorgenson, Dale W. & Nomura, Koji, 2005. "The industry origins of Japanese economic growth," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 482-542, December.
    3. Ito, Keiko & 伊藤, 恵子 & イトウ, ケイコ & Fukao, Kyoji & 深尾, 京司 & フカオ, キョウジ, 2003. "Vertical Intra-Industry Trade and the Division of Labor in East Asia," Discussion Paper Series a444, Institute of Economic Research, Hitotsubashi University.
    4. 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.
    5. Hitoshi Sasaki & Kenichi Sakura, 2005. "Changes in the Demand for Skilled Labor within Japan's Manufacturing Sector:Effects of Skill-Biased Technological Change and Globalization," Bank of Japan Working Paper Series 05-E-12, Bank of Japan.
    6. Yanfei Li & Wai-Mun Chia, 2013. "Information and communication technology and economic growth of four Asian industrialized economies," Chapters, in: Sören Eriksson (ed.), Clusters and Economic Growth in Asia, chapter 2, pages 21-39, Edward Elgar Publishing.
    7. Betts, Caroline, 2021. "Accounting for Japan's Lost Score," MPRA Paper 109285, University Library of Munich, Germany.
    8. Betts, Caroline, 2021. "How many (more) lost decades? The great productivity slowdown in Japan," MPRA Paper 106503, University Library of Munich, Germany.
    9. Naomi N. Griffin & Kazuhiko Odaki, 2006. "Reallocation and Productivity Growth in Japan: Revisiting the Lost Decade of the 1990s: Working Paper 2006-02," Working Papers 17603, Congressional Budget Office.
    10. Kawamoto, Takuji, 2005. "What Do the Purified Solow Residuals Tell Us about Japan's Lost Decade?," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 23(1), pages 113-148, February.
    11. Okada, Yosuke, 2005. "Competition and productivity in Japanese manufacturing industries," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 586-616, December.
    12. Kyoji Fukao & Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined?: The Role of Business Networks in East Asia," Hi-Stat Discussion Paper Series d03-24, Institute of Economic Research, Hitotsubashi University.
    13. Yosuke Okada, 2005. "Competition and Productivity in Japanese Manufacturing Industries," NBER Working Papers 11540, National Bureau of Economic Research, Inc.
    14. Yoshihiko Hogen & Ko Miura & Koji Takahashi, 2017. "Large Firm Dynamics and Secular Stagnation: Evidence from Japan and the U.S," Bank of Japan Working Paper Series 17-E-8, Bank of Japan.
    15. Fukao, Kyoji & Ito, Keiko & Kwon, Hyeog Ug, 2005. "Do out-in M&As bring higher TFP to Japan? An empirical analysis based on micro-data on Japanese manufacturing firms," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 272-301, June.
    16. Preciado Arreola, José Luis & Johnson, Andrew L. & Chen, Xun C. & Morita, Hiroshi, 2020. "Estimating stochastic production frontiers: A one-stage multivariate semiparametric Bayesian concave regression method," European Journal of Operational Research, Elsevier, vol. 287(2), pages 699-711.
    17. Naomi N. Griffin, 2005. "Labor Adjustment, Productivity and Output Volatility: An Evaluation of Japan's Employment Adjustment Subsidy: Working Paper 2005-10," Working Papers 17567, Congressional Budget Office.

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