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Industrial Productivity Divergence and Input-Output Network Structures: Evidence from Japan 1973–2012

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  • Alvaro Domínguez

    (Graduate School of Economics, Nagoya University, Aichi 464-8601, Japan)

  • Carlos Mendez

    (Graduate School of International Development, Nagoya University, Aichi 464-8601, Japan)

Abstract

Since the early 1990s, there have been larger and increasing labor productivity differences across industries in Japan. More specifically, a clear pattern of sigma and beta divergence across industries is observed. To shed light on these stylized facts, we first evaluate the input–output structure of Japan through the lens of a community-detection algorithm from network theory. Results from this analysis suggest the existence of two input–output network structures: a densely-connected group of industries (a stationary community), whose members remain in it throughout the period; and a group of industries (a transitional community) whose members do not belong to this first group. Next, we re-evaluate the industrial divergence pattern of Japan in the context of each network structure. Results suggest that divergence is mostly driven by the transitional community. Interestingly, since 2007, a pattern of sigma convergence started to re-appear only in the stationary community. We conclude suggesting that industrial divergence and instability in community membership are not necessarily indicative of low productivity performance.

Suggested Citation

  • Alvaro Domínguez & Carlos Mendez, 2019. "Industrial Productivity Divergence and Input-Output Network Structures: Evidence from Japan 1973–2012," Economies, MDPI, vol. 7(2), pages 1-14, May.
    • Handle: RePEc:gam:jecomi:v:7:y:2019:i:2:p:52-:d:236041
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    References listed on IDEAS

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    Cited by:

    1. Daryn Joy Go & Michael Angelo Promentilla & Kathleen Aviso & Krista Danielle Yu, 2019. "The Evolution of the Key Sectors in the Philippine Economy Using an AHP-Based Sector Prioritization Index," Economies, MDPI, vol. 7(3), pages 1-20, August.
    2. 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.

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