The Productivity Dynamics of Japanese Commerce: An empirical analysis based on microdata from the basic survey of Japanese business structure and activities

In this paper we use corporate data from the commercial sector of the Basic Survey of Japanese Business Structure and Activities from 1994 to 2005 to analyze the productivity dynamics of Japanese commerce. Unlike the findings of existing research directed at the manufacturing industry, the source of the increase in TFP in Japanese commerce is the positive effect of exiting, since the TFP of the sector as a whole rises as a result of the exit of firms with low productivity. In addition, we find that in Japanese commerce the persistence of technical disparities between firms is weak, and not having clearly established special technical characteristics, such as best practices, is a reason why it lags behind the U.S.