Comparison of TFP Growth Rates and Dynamics between China, Korea and Japan Using the East Asian Listed Companies (EALC) Database

Author Name FUKAO Kyoji (Faculty Fellow, RIETI) / INUI Tomohiko (Faculty Fellow, RIETI) / KIM Young Gak (Senshu University) / KWON Hyeog Ug (Faculty Fellow, RIETI) / ZHANG Hongyong (Senior Fellow, RIETI)
Creation Date/NO. July 2023 23-J-022
Research Project East Asian Industrial Productivity
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We estimate and compare firm-level TFP growth rates in China, Korea, and Japan over the period 1995-2018 by using East Asia listed Companies (EALC) databases. When we estimate TFP growth rate, we apply information on industry-specific deflators from the Japan Industrial Productivity (JIP), Korea Industrial Productivity (KIP), and China Industrial Productivity (CIP) databases with respect to prices of output and input services, respectively.

The results show that the TFP growth rate in the manufacturing sector during the 2000s has been steady in Japan and China, while it has been sluggish in Korea. In the non-manufacturing sector, TFP growth rate is positive for Japan and Korea, although the rate is low, while the TFP growth rate is negative for China.

TFP dynamic analysis in Japan, Korea, and China show that within-firm effect effects play a significant role in TFP growth rate fluctuations in the manufacturing sector of Japan and Korea. A large decline in within-firm effect effects is observed in Korean manufacturing sector. In addition to the within-firm effect, the entry effect plays a significant role with respect to TFP growth rate improvement in the Chinese manufacturing sector.