Sources of Growth and Stagnation in the Japanese Economy: An Analysis Based on Data on Listed Firms Spanning More Than Five Decades

This study presents growth accounting and an analysis of productivity dynamics (as measured by labor productivity and total factor productivity, TFP) covering almost all listed firms in Japan spanning the 55-year period from 1960 to 2015 using the Development Bank of Japan's "Corporate Financial Databank" on listed firms. The results show that during much of the period, the productivity growth of listed firms diverged substantially from macroeconomic productivity trends: during the 1980s, when the Japanese economy received worldwide acclaim, listed firms' productivity growth declined substantially, while during the 1995–2010 period, when Japan's economy registered only tepid growth, listed firms enjoyed steady productivity improvements. Moreover, from 2010 to 2015, when the economy overall accelerated under "Abenomics," listed firms' productivity growth remained sluggish. This divergence in productivity trends between the economy overall and listed firms likely is due to differences in productivity growth between listed firms and other firms – primarily small and medium-sized firms – linked to their size, such as differences in terms of their speed of internationalization, investment in tangible and intangible assets, increases in part-time employment, and restructuring. This finding suggests that understanding differences in productivity linked to firm size is crucial for understand productivity dynamics in Japan's economy, which has been characterized by a dual structure since the Meiji period. On the other hand, our analysis of productivity dynamics shows that the contribution to overall TFP growth of the reallocation of resources from listed firms with high TFP to other listed firms has been small and that most of the overall TFP growth was due to TFP growth within each firm (i.e., the within effect). The exception is the 2010–15 period, when resource allocation in the nonmanufacturing sector did make a substantial positive contribution to TFP growth.

The English version of this paper is 21-E-094.