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Productivity Dynamics in Japan and the Negative Exit Effect

Author

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  • Ikeuchi, Kenta
  • Kim, YoungGak
  • Kwon, Hyeog Ug
  • Fukao, Kyoji
  • 深尾, 京司

Abstract

We conducted an analysis of productivity dynamics using the microdata of the Credit Risk Database (CRD), the Establishment and Enterprise Census and the Economic Census. We found that the negative exit effect in Japan is driven by the exit of some highly productive firms. This finding suggests that to reduce the negative exit effect policies to support SMEs should not be based on their size but by focusing on SMEs with high TFP that are actively investing.

Suggested Citation

  • Ikeuchi, Kenta & Kim, YoungGak & Kwon, Hyeog Ug & Fukao, Kyoji & 深尾, 京司, 2020. "Productivity Dynamics in Japan and the Negative Exit Effect," SSPJ Discussion Paper Series DP20-001, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:sspjdp:dp20-001
    Note: This study is conducted as part of the “East Asian Industrial Productivity”project undertaken at the Research Institute ofEconomy, Trade and Industry (RIETI) and is commissioned by the Small and Medium Enterprise Agency “Empirical analysis on metabolism of small and medium entreprises”.
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    References listed on IDEAS

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    1. Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
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    3. Kenta IKEUCHI & YoungGak KIM & Hyeog KWON & Kyoji FUKAO, 2018. "Productivity Dynamics in Japanese Small and Medium-Sized Enterprises: An empirical analysis based on the Credit Risk Database (Japanese)," Discussion Papers (Japanese) 18019, Research Institute of Economy, Trade and Industry (RIETI).
    4. Inui, Tomohiko & Kim, YoungGak & Kwon, Hyeog Ug & Fukao, Kyoji, 2015. "Productivity Dynamics and Japan's Economic Growth: An Empirical Analysis Based on the Financial Statements Statistics of Corporations by Industry," Economic Review, Hitotsubashi University, vol. 66(4), pages 289-300, October.
    5. 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.
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    11. 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.
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    Cited by:

    1. FUKAO, Kyoji & KIM, YoungGak & KWON, Hyeog Ug, 2026. "Sources of Productivity Growth by Firm Size and Causes of the Negative Exit Effect," TDB-CAREE Discussion Paper Series E-2025-03, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    2. Kosuke Aoki & Yoshihiko Hogen & Yojiro Ito & Kenji Kanai & Kosuke Takatomi, 2024. "Determinants of Price Markups at Japanese Firms and Implications for Productivity," Bank of Japan Working Paper Series 24-E-15, Bank of Japan.
    3. Kotone Yamada & Yukio Minoura & Jouchi Nakajima & Tomoyuki Yagi, 2023. "Corporate Finance Facility and Resource Allocation: Research Trends and Developments during the Spread of COVID-19," Bank of Japan Working Paper Series 23-E-1, Bank of Japan.

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    Keywords

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    JEL classification:

    • 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

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