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Explaining J apan's Unproductive Two Decades
Author(s) -
Fukao Kyoji
Publication year - 2013
Publication title -
asian economic policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.58
H-Index - 20
eISSN - 1748-3131
pISSN - 1832-8105
DOI - 10.1111/aepr.12020
Subject(s) - productivity , economics , capital (architecture) , investment (military) , total factor productivity , product (mathematics) , monetary economics , agricultural economics , labour economics , macroeconomics , geometry , mathematics , archaeology , politics , political science , law , history
Using industry‐ and micro‐level data, this paper examines why J apan's productivity growth has been slow for such a long time and how it can be accelerated in the future. J apan's capital–gross domestic product ratio continued to increase after 1991, and this increase in the capital–gross domestic product ratio must have contributed to the decline in the rate of return on capital in J apan by decreasing the marginal productivity of capital. On the other hand, J apan's accumulation of information and communication technology capital and intangible investment was very slow. Compared with large firms, which enjoyed an acceleration in the total factor productivity growth in recent years, Japanese small‐ and medium‐sized enterprises were left behind in information and communication technology capital and intangible investment, and their productivity growth has been very low. Furthermore, as large firms expanded their supply chains globally and relocated their factories abroad, research and development spillovers from large firms to small‐ and medium‐sized enterprises seem to have declined.