Japan's economy these days is sometimes called a "hypothermia economy," in which sluggish growth in aggregate demand and supply due to the aging and shrinking of the population and declining capital formation has become the norm. However, taking a more careful look at data on Japan's industrial structure as well as labor and capital input, one finds that, hidden underneath this low growth, Japan's economy is undergoing rapid structural change. Examples include demand shifts across industries such as expanding demand for nursing care on the one hand and sluggish export demand due to the deceleration of China's economy on the other; substantial improvement in manufacturing markup ratios under the depreciation of the yen brought about by Abenomics (in terms of the real effective exchange rate, the yen is the weakest it has been since the early 1970s); an increase in hours worked and a decline in labor quality due to the increased (primarily non-regular) employment of women and the elderly; the spread of new information and communication technology driving the so-called fourth industrial revolution; and the growing dependence of prefectural economies on income transfers and net imports. In order to design appropriate growth strategies and to prepare for "black swan" events like economic crises, it is necessary to accurately comprehend such structural changes.
This project aims to carefully examine structural changes in the Japanese and East Asian economies and contribute to the design of growth strategies based on evidence through the following:
(1) Analyses of changes in labor and capital input (including intangible assets) and total factor productivity growth at the detailed industry level, using the JIP 2018 Database, which has been fully revised to correspond to the new SNA.
(2) Analyses of China's economic slowdown, using the new China Industrial Productivity (CIP) Database.
(3) International productivity comparisons and analyses in collaboration with the World KLEMS, EU KLEMS, and Asia KLEMS projects and the OECD.
(4) Analyses of productivity, the fourth industrial revolution, international competitiveness, dual structures, etc., using official firm and establishment data as well as data from the East Asian Listed Companies (EALC) database.
(5) Analyses of regional productivity differences in Japan through collaboration with the Regional-level Japan Industrial Productivity (R-JIP) project.
April 1, 2019 - March 31, 2021
Major Research Results
RIETI Discussion Papers
"Sources of Growth and Stagnation in the Japanese Economy: An Analysis Based on Data for Listed Firms Spanning More Than Five Decades" (FUKAO Kyoji, KIM YoungGak and KWON Hyeog Ug)
"Sources of Growth and Stagnation in the Japanese Economy: An Analysis Based on Data on Listed Firms Spanning More Than Five Decades" (FUKAO Kyoji, KIM YoungGak and KWON Hyeog Ug)
RIETI Policy Discussion Papers
RIETI Discussion Papers
"Foreign Direct Investment in China and Domestic Activities of Japanese Firms" (OKUBO Toshihiro)
"Establishment Size, Workforce Composition and the College Wage Gap in Japan" (IKEUCHI Kenta, FUKAO Kyoji and Cristiano PERUGINI)
"Regional Banking and Plant Survival in Japan" (HNISHIOKA Shuichiro, OKUBO Toshihiro and TANAKA Mari)
"In Search of Lost Time: Firm Vintage and Macroeconomic Dynamics" (HAMANO Masashige and OKUBO Toshihiro)
"No Successor, No Success? The Impact of a Little Son on Business Performance" (KODAMA Naomi, MURAKAMI Yoshiaki and TANAKA Mari)
"Stakeholder Participation in a Company's Success and Resilience Against Shocks" (OKUBO Toshihiro, Alexander F. WAGNER and YAMADA Kazuo)
"Why Do Real Wages Stagnate in Japan and Korea?" (Hyunbae CHUN, FUKAO Kyoji, KWON Hyeog Ug and Jungsoo PARK)
"Exchange Rates, International Outsourcing, and Firm Export Dynamics" (INUI Tomohiko and Young Gak KIM)
"The Effect of Exporting on Product Compositional Changes and a Manufacturing Plant's Average Product Characteristics in Japan" (ITO Keiko and Chin Hee HAHN)
"Sources of Labor Productivity Growth in the Service Sector: An Industry-Level Empirical Analysis Using the JIP Database, 1955-2015" (FUKAO Kyoji and MAKINO Tatsuji )
"E-Commerce, Firm Performance and Economic Dynamism: Empirical analysis using the Economic Census" (KIM YoungGak, KWON Hyeog Ug, FUKAO Kyoji and IKEUCHI Kenta)
"Business Dynamism and Productivity Growth under Abenomics: An Empirical Analysis Based on Micro Data from Japan's Economic Census for Business Activity" (FUKAO Kyoji, KIM YoungGak, KWON Hyeog Ug and IKEUCHI Kenta)
"The Determinants of Investment in Tangible Fixed Capital in Japan: Evidence from Firm Level" (FUKAO Kyoji, KIM YoungGak, KWON Hyeog Ug and IKEUCHI Kenta)
"The Impact of IT on Firm TFP Growth and Resource Reallocation within Firms" (KIM YoungGak and INUI Tomohiko)
"Impact of M&A by foreign companies on innovation activities of acquired companies" (SUZUKI Shinya, INUI Tomohiko and IKEDA Yuya)
"Employment and Productivity Dynamics and Patent Applications Related to the Fourth Industrial Revolution" (IKEUCHI Kenta)
"The Impact of AI and Robot Technology on Firm Productivity and Employment" (KIM YoungGak and INUI Tomohiko)
The Determinants of Labor Share in Japan (HANEDA Sho, KWON Hyeog Ug and IJIRI Naohiko)