IDEAS home Printed from
   My bibliography  Save this paper

Japan’s Economic Growth and Information Technology Potential Despite Fumbled Innovation


  • Akihiko Shinozaki

    (Japan Center For Economic Research)


The purpose of this paper is to measure the influence of information technology (IT) on Japanese economic growth. For this purpose, we first conduct growth accounting analysis for data acquired over the last 30 years, reviewing the contribution of information technology to economic growth. Then we estimate and simulate production function models that incorporate IT capital stock and network effects explicitly. These analyses yield four observations. First, the Japanese economy has experienced sluggish IT investment since the 1990s, although it had a massive investment boom in the late 1980s. Second, growth accounting analysis reveals that information technology has not contributed changes of productivity growth since the 1990s, when new types of open-network technology prevailed throughout the world, although it had surely influenced the productivity growth until the late 1980s. Third, estimation of the production function model proves that IT capital stock and network effects significantly influenced the economy, which suggests that sluggishness of IT investment plunged the economy into a lower growth path since the 1990s. Fourth, simulations of the production function model demonstrate that the economy has potential to grow at a higher rate than the consensus belief of less than two percent. Consequently, it could be argued that the Japanese economy, for which we have not yet seen a new economy, still has fair room to accelerate economic growth if it were somehow able to maximize the benefits of innovation, which the economy has fumbled during the last decade.

Suggested Citation

  • Akihiko Shinozaki, 2008. "Japan’s Economic Growth and Information Technology Potential Despite Fumbled Innovation," Development Economics Working Papers 21957, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:develo:21957

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Information Technology; new economy; Solow paradox; productivity; Japanese economy;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:develo:21957. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.