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Enhancing the Productivity of the Service Sector in Japan

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Author Info
Randall S. Jones
Taesik Yoon
Abstract

Labour productivity growth in the service sector, which accounts for 70% of Japan’s economic output and employment, has slowed markedly in recent years in contrast to manufacturing. The disappointing performance is associated with weak competition in the service sector resulting from strict product market regulation and the low level of import penetration and inflows of foreign direct investment (FDI). Reversing the deceleration in productivity growth in the service sector is essential to raise Japan’s growth potential. The key is to eliminate entry barriers, accelerate regulatory reform, upgrade competition policy and reduce barriers to trade and inflows of FDI. Special attention should be given to factors limiting productivity growth in services characterised by either low productivity or high growth potential, such as retail, transport, energy and business services. Finally, it is essential to increase competition in public services, such as health and education, where market forces have been weak.

Améliorer la productivité dans le secteur des services au Japon
La croissance de la productivité du travail dans le secteur des services, qui représente 70 % de la production économique et de l’emploi au Japon, s’est sensiblement ralentie ces dernières années contrairement à l’évolution observée dans le secteur manufacturier. Ces résultats décevants sont associés à la faiblesse de la concurrence dans les services imputable à la rigueur de la réglementation des marchés de produits, au faible niveau de pénétration des importations et au manque de dynamisme des investissements directs de l’étranger (IDE). Le ralentissement de la croissance de la productivité dans le secteur des services doit absolument être inversé pour accroître le potentiel de croissance du Japon. Il est indispensable d’éliminer les obstacles à l’entrée, d’accélérer la réforme de la réglementation, de renforcer la politique de concurrence et de réduire les obstacles au commerce et aux entrées d’IDE. Une attention particulière devrait être accordée aux facteurs limitant la croissance de la productivité dans les services caractérisés soit par une faible productivité, soit par un potentiel de croissance élevé, comme le commerce de détail, les transports, l’énergie et les services aux entreprises. Enfin, il est essentiel d’accroître la concurrence dans les services publics, comme la santé et l’éducation, où les forces du marché ont peu joué.

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Paper provided by OECD, Economics Department in its series OECD Economics Department Working Papers with number 651.

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Date of creation: 01 Dec 2008
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Handle: RePEc:oec:ecoaaa:651-en

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Related research
Keywords: air transport; Business service; competition policy; electricity; foreign direct investment; gas; harbours; Japan Post; Japan; JFTC; productivity and growth; public services; regulatory reforms; retail sector; service sector; services trade; special zones; commerce de service; croissance de la productivité; distribution de détail; électricité; gaz; investissement direct étranger; Japon; JFTC; politique de la concurrence; ports; poste japonaise.; réforme réglementaire; secteur de service; service aux entreprises; transport aérien; zones spéciales;

Find related papers by JEL classification:
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand
R31 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Housing Supply and Markets

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