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Sectoral productivity convergence, input-output structure and network communities in Japan

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  • Domínguez, Alvaro
  • Santos-Marquez, Felipe
  • Mendez, Carlos

Abstract

We study sectoral productivity convergence through the input-output structure of the economy and its network representation. In particular, we study 106 production sectors in Japan over the 2003–2012 period and identify highly interconnected sectors using community detection algorithms. We next characterize the dynamics of these communities by evaluating the evolution of productivity dispersion using parametric and nonparametric frameworks of sectoral productivity convergence. We find two dominant communities: The central members of community 1 are mostly service-related industries, while the central members of community 2 are mostly high-tech manufacturing industries. The convergence analyses indicate that the two communities have contrasting convergence-divergence patterns. Robust convergence is only found for community 1. In contrast, community 2 appears to be the source of the weak divergence pattern that is observed across all industries in Japan.

Suggested Citation

  • Domínguez, Alvaro & Santos-Marquez, Felipe & Mendez, Carlos, 2021. "Sectoral productivity convergence, input-output structure and network communities in Japan," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 582-599.
    • Handle: RePEc:eee:streco:v:59:y:2021:i:c:p:582-599
    DOI: 10.1016/j.strueco.2021.10.012
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    2. Han, Yang, 2022. "The impact of the COVID-19 pandemic on China's economic structure: An input–output approach," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 181-195.

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    More about this item

    Keywords

    Convergence; Input-output structure; Japan; Networks; Sectoral productivity;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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