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Why Did Japan's TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms

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  • Kyoji Fukao
  • Hyeog Ug Kwon

Abstract

This study analyses the cause of the slowdown in Japan's TFP growth during the 1990s. Many preceding studies, examining the issue at the macro‐ or industry‐level, have found that the slowdown was primarily due to the stagnation in TFP growth in the manufacturing sector. Using firm level panel data covering the entire sector, we investigate the causes of the TFP slowdown and find that the reallocation of resources from less efficient to more efficient firms was very slow and limited. This “low metabolism” seems to be an important cause for the slowdown in Japan's TFP growth.
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Suggested Citation

  • Kyoji Fukao & Hyeog Ug Kwon, 2005. "Why Did Japan's TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms," Discussion papers 05004, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:05004
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