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The Structural Causes of Japan's "Two Lost Decades" (Japanese)

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  • YoungGak KIM
  • FUKAO Kyoji
  • MAKINO Tatsuji

Abstract

Although by the early 2000s, Japan had largely overcome its non-performing loan problems, economic growth hardly accelerated, resulting in what now are "two lost decades." This paper examines the underlying reasons from a long-term and structural perspective. Major issues examined include the chronic lack of domestic demand since the mid-1970s, caused by a long-run decline in capital formation through a slowdown in the growth of the working age population and resulting in a current account surplus and yen appreciation, and supply-side issues such as stagnant TFP growth caused by Japan's low economic metabolism. A key finding is that whereas large firms since the mid-1990s have achieved greater increases in TFP than in the 1980s through R&D and internationalization, the TFP of small firms has stagnated.

Suggested Citation

  • YoungGak KIM & FUKAO Kyoji & MAKINO Tatsuji, 2010. "The Structural Causes of Japan's "Two Lost Decades" (Japanese)," Policy Discussion Papers (Japanese) 10004, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:rpdpjp:10004
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    File URL: https://www.rieti.go.jp/jp/publications/pdp/10p004.pdf
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    Cited by:

    1. Masahito Ambashi, 2017. "Competition Effects and Industrial Productivity: Lessons from Japanese Industry," Asian Economic Papers, MIT Press, vol. 16(3), pages 212-249, Fall.
    2. 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.

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