The Roles of Social Infrastructure and Deregulation on Productivity Improvement through Resource Reallocation in the Japanese Regional Economies

Author Name MIYAGAWA Tsutomu (Faculty Fellow, RIETI) / KAWAKAMI Kazuyasu (Toyo University) / EDAMURA Kazuma (National Institute of Science, Technology, and Education Policy)
Creation Date/NO. March 2017 17-J-022
Research Project Refinement and Analysis of the Regional-Level Japan Industrial Productivity Database: Providing basic information for Japan's regional development policy
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Productivity growth in the aggregate economy can be broken down into two components: the weighted average of industry level productivity growth and productivity growth through resource reallocation between industries. Using the Regional-level Japan Industrial Productivity Database (R-JIP database), we examine the effects of the accumulation of social infrastructure and deregulation on the second component of productivity growth, namely, through resource reallocation, in the regional economies in Japan. Although we do not find positive contributions of social infrastructure to productivity improvement through capital movements, we find that the accumulation of social infrastructure contributed to productivity improvement through labor reallocation. In the 2000s, deregulation within special districts for structural reform contributed to productivity growth through labor reallocation. Our empirical studies imply that deregulation, rather than accumulation of social infrastructure, is the better tool for productivity improvement.