An International Comparison of the TFP Levels of Japanese, Korean and Chinese Listed Firms

The study group on the Creation of a Productivity Database on Japanese, Chinese, and South Korean Firms at the Japan Center for Economic Research (JCER), in conjunction with the Center for Economic Institutions (CEI) of Hitotsubashi University, the Center for China and Asian Studies (CCAS) of Nippon University, and the Center for Corporate Competitiveness of Seoul National University, has compiled the East Asian Listed Companies Database 2007 (EALC 2007). In this paper, we explain the methodology and data sources used in the construction of the EALC 2007. We also conduct some descriptive analysis based on the EALC 2007. To compare the TFP level of firms in these countries, we first estimated the TFP of firms in each country using the method of Good, Nadiri and Sickles (1997). Then we estimated the relative TFP by industry in the benchmark year using Japanese industries as benchmarks and combined the estimated TFP of firms. When estimating relative TFP by industry for Korea and China, we applied the industry-level price estimates of the three countries from the ICPA project and converted industry outputs and inputs into the same currency unit (Japanese Yen). The estimation results obtained indicate that the productivity of Japanese firms is still higher than that of their Chinese and Korean counterparts but that the productivity of Korean firms is rapidly increasing, with the emergence of some firms that are now overtaking their Japanese rivals in terms of productivity, particularly in the electric machinery sector.