|Author Name||YoungGak KIM (Senshu University) /FUKAO Kyoji (Faculty Fellow, RIETI) /MAKINO Tatsuji (Research Assistant, RIETI)|
|Creation Date/NO.||June 2010 10-P-004|
|Research Project||Productivity of Industries and Firms and Japanese Economic Growth
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Although by the early 2000s, Japan had largely overcome its non-performing loan problems, economic growth hardly accelerated, resulting in what now are "two lost decades." This paper examines the underlying reasons from a long-term and structural perspective. Major issues examined include the chronic lack of domestic demand since the mid-1970s, caused by a long-run decline in capital formation through a slowdown in the growth of the working age population and resulting in a current account surplus and yen appreciation, and supply-side issues such as stagnant TFP growth caused by Japan’s low economic metabolism. A key finding is that whereas large firms since the mid-1990s have achieved greater increases in TFP than in the 1980s through R&D and internationalization, the TFP of small firms has stagnated.