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The Causes of Japan’s Economic Slowdown: An Analysis Based on the Japan Industrial Productivity Database

Author

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  • Kyoji Fukao
  • YoungGak Kim
  • HyeogUg Kwon

Abstract

Using the Japan Industrial Productivity Database (JIP) and the EU KLEMS database 2017, we compare the sources of economic growth of Japan, the United States, Germany, France, and the U.K. for the period 1995–2015 using growth accounting. We find that the reasons why Japan’s economic growth during the 2005–2015 period was much slower than that of the other major economies are the decline in the working-age population and sluggish investment in capital services. Among the five countries, Japan was the only one whose growth rate of the capital stock was lower than the steady state growth rate. Another reason for the slowdown in Japan’s economic growth in 2005–2015 was the decline in TFP growth, which was caused by a drop in productivity growth in a small number of industries, including electronic data processing machines, electricity, and wholesale trade.

Suggested Citation

  • Kyoji Fukao & YoungGak Kim & HyeogUg Kwon, 2021. "The Causes of Japan’s Economic Slowdown: An Analysis Based on the Japan Industrial Productivity Database," International Productivity Monitor, Centre for the Study of Living Standards, vol. 40, pages 56-88, Spring.
    • Handle: RePEc:sls:ipmsls:v:40:y:2021:3
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    File URL: http://www.csls.ca/ipm/40/IPM_40_Fukao.pdf
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    References listed on IDEAS

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    1. 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.
    2. Belderbos, Rene & Ikeuchi, Kenta & Fukao, Kyoji & Kim, Young Gak & Kwon, Hyeog Ug, 2013. "Plant Productivity Dynamics and Private and Public R&D Spillovers: Technological, Geographic and Relational Proximity," CEI Working Paper Series 2013-05, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Germán Gutiérrez & Thomas Philippon, 2017. "Investmentless Growth: An Empirical Investigation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 89-190.
    4. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters, in: Paolo Onofri (ed.), The Economics of an Ageing Population, chapter 2, Edward Elgar Publishing.
    5. Kyoji Fukao & Tsutomu Miyagawa & Kentaro Mukai & Yukio Shinoda & Konomi Tonogi, 2009. "Intangible Investment In Japan: Measurement And Contribution To Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 717-736, September.
    6. Kyoji Fukao & Tsutomu Miyagawa & Hak Kil Pyo & Keun Hee Rhee, 2012. "Estimates of Total Factor Productivity, the Contribution of ICT, and Resource Reallocation Effects in Japan and Korea," Chapters, in: Matilde Mas & Robert Stehrer (ed.), Industrial Productivity in Europe, chapter 9, Edward Elgar Publishing.
    7. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    8. FUKAO Kyoji & KIM YoungGak & KWON Hyeog Ug & IKEUCHI Kenta, 2021. "Business Dynamism and Productivity Growth under Abenomics: An Empirical Analysis Based on Micro Data from Japan's Economic Census for Business Activity (Japanese)," Discussion Papers (Japanese) 21015, Research Institute of Economy, Trade and Industry (RIETI).
    9. Rene Belderbos & Kyoji Fukao & Kenta Ikeuchi & Young Gak Kim & Hyeog Ug Kwon, 2015. "Buyers, suppliers, and R&D spillovers," Working Papers of Department of Management, Strategy and Innovation, Leuven 502593, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    10. Paprzycki,Ralph & Fukao,Kyoji, 2012. "Foreign Direct Investment in Japan," Cambridge Books, Cambridge University Press, number 9781107411289, January.
    11. FUKAO Kyoji & HAMAGATA Sumio & INUI Tomohiko & ITO Keiko & Hyeog Ug KWON & MAKINO Tatsuji & MIYAGAWA Tsutomu & NAKANISHI Yasuo & TOKUI Joji, 2007. "Estimation Procedures and TFP Analysis of the JIP Database 2006 Provisional Version," Discussion papers 07003, Research Institute of Economy, Trade and Industry (RIETI).
    12. Kyoji FUKAO & Taisuke KAMEDA & Kota NAKAMURA & Ryoichi NAMBA & Masahiro SATO, 2017. "Measurement of Deflators and Real Value Added in the Service Sector," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 194, pages 9-44, May.
    13. Matilde Mas & Robert Stehrer (ed.), 2012. "Industrial Productivity in Europe," Books, Edward Elgar Publishing, number 14369.
    14. Fukao, Kyoji & Ikeuchi, Kenta & Kim, YoungGak & Kwon, Hyeog Ug, 2016. "Why was Japan left behind in the ICT revolution?," Telecommunications Policy, Elsevier, vol. 40(5), pages 432-449.
    15. Hoshi,Takeo & Lipscy,Phillip Y. (ed.), 2021. "The Political Economy of the Abe Government and Abenomics Reforms," Cambridge Books, Cambridge University Press, number 9781108843959.
    16. Kim, YoungGak & Fukao, Kyoji & Makino, Tatsuji, 2010. "The Structural Causes of Japan's “Two Lost Decades”," Economic Review, Hitotsubashi University, vol. 61(3), pages 237-260, July.
    17. Martin Neil Baily & Barry P. Bosworth & Siddhi Doshi, 2020. "Lessons from Productivity Comparisons of Germany, Japan, and the United States," International Productivity Monitor, Centre for the Study of Living Standards, vol. 38, pages 81-103, Spring.
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    Cited by:

    1. René BELDERBOS & IKEUCHI Kenta & FUKAO Kyoji & KIM Young Gak & KWON Hyeog Ug, 2022. "What Do R&D Spillovers from Universities and Firms Contribute to Productivity? Plant level productivity and technological and geographic proximity in Japan," Discussion papers 22106, Research Institute of Economy, Trade and Industry (RIETI).

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