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Productivity Improvement and Economic Growth

Author

Listed:
  • Koji Nakamura

    (Bank of Japan)

  • Sohei Kaihatsu

    (Bank of Japan)

  • Tomoyuki Yagi

    (Bank of Japan)

Abstract

This paper summarizes recent discussion on labor productivity which is the source of medium- to long-term economic growth and observes the characteristics of recent productivity developments using relevant statistical data. Furthermore, the paper examines the background of recent Japan's low labor productivity growth and analyzes issues regarding Japan's sustainable growth.Labor productivity in major advanced countries has been experiencing a slowdown in recent years. This is mainly affected by the slowdown of Total Factor Productivity (TFP). In Japan, there are two reasons behind the slowdown: first, technology and ideas accumulated by research and development (R&D) and management resources such as capital and labor are not utilized efficiently; and second, these resources are not efficiently reallocated among corporations.In order to improve Japan's productivity in the medium to long-term, it is desirable to encourage the flexible reallocation of management resources such as capital and labor by changing working process at the corporate level in accordance with changes in the socio-economic environment and the advent of new technologies, as well as by improving efficiency in the labor and capital markets.

Suggested Citation

  • Koji Nakamura & Sohei Kaihatsu & Tomoyuki Yagi, 2018. "Productivity Improvement and Economic Growth," Bank of Japan Working Paper Series 18-E-10, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp18e10
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    References listed on IDEAS

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    More about this item

    Keywords

    Productivity; Potential growth; Intangible assets; Resource reallocation;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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