Productivity Growth in the Global Economy: Innovation in the Service Sector and the Role of Intangible Assets

The IT revolution and globalization have majorly impacted the world economy since the 1990s. Countries are adjusting to increased global competition by adopting innovative technologies and improving productivity to create new industries and promote economic growth. Following a prolonged period of economic stagnation, Japan is finally beginning to recognize the need for improved productivity as its economy continues on a path to recovery. In this context, the governmental Council on Economic and Fiscal Policy has formulated the "Program for Enhancing Growth Potential."

A review of Japan's industrial structure indicates that the country has thus far been able to maintain a high level of international competitiveness in the manufacturing sector. Yet productivity in its service sector, which employs more than 60% of the nation's workforce, lags far behind that of the United States and Europe. In these countries it is widely recognized that the accumulation of a broader range of intangible assets, including human resources development and organizational restructuring aimed at leveraging IT, plays a vital role in improving productivity in service industries. To improve the productivity of the Japanese economy as a whole, it will be necessary to recognize the role of intangible assets and raise productivity in the service industries.

With the recent inclusion of RIETI's industry and corporate productivity project in the European productivity project, it is now possible to undertake international comparisons of productivity with the advanced economies of the United States and Europe on an industry level.

The first part of this symposium will focus on the results of projects for international comparison of productivity. Discussions will be centered on how productivity can be improved in service industries. The subject will be approached from the perspectives of Japan, Europe, and the United States.

The second part will feature a panel discussion with the participation of policy-makers, addressing the following issues.

• Causal factors in inter-industry (in particular, the service industry) productivity differentials in the United States, advanced European countries, and Japan, and the productivity-boosting measures that have been adopted in these countries.
• Progress made in these countries in the accumulation of intangible assets and regulatory reform, which are believed to be vitally important toward improving service industry productivity.
• Can the United States sustain its upward trend in productivity based on improvements in service industry productivity? If so, what supports this outlook?
• What are the causal factors in Europe's recent strong economic performance? Can this be attributed to improvements in service industry productivity?
• What policies must Japan adopt to improve productivity?
• How will rapid economic growth in China and India impact economic growth in the United States, advanced European countries, and Japan?

This symposium will bring together a broad range of discussants, including experts and researchers from Japan and abroad. We anticipate that the output of these discussions will contribute to the improvement of productivity in Japan.