Although Japan had largely resolved the problem of banks’ non-performing loans and firms’ damaged balance sheets by the early 2000s, productivity growth hardly accelerated, resulting in what now are “two lost decades.” This presentation examines the underlying reasons of Japan’s low TFP growth from a long-term and structural perspective using an industry-level database and micro-level data. The data seem to show that, since the 1990s, some core characteristics of Japanese firms, such as tight customer-supplier relationships and the life-time employment system, have become obstacles to their TFP growth in an environment shaped by globalization and slow/negative growth in the working age population.

 

Kyoji Fukao is Professor at the Institute of Economic Research, Hitotsubashi University, as well as a Program Director and Faculty Fellow at the Research Institute of Economy, Trade and Industry (RIETI). Other positions include: Vice-Chairperson of the Working Party on Industry Analysis (WPIA), OECD; Member of the Executive Committee of the Asian Historical Economics Society (AHES); External Research Associate at the Centre on Competitive Advantage in the Global Economy (CAGE), Warwick University. He has published widely on productivity, international economics, economic history, and related topics in journals such as the Journal of Political Economy, Quarterly Journal of Economics, Review of Income and Wealth, Explorations in Economic History, and Economica. In addition, he is the author of Japan’s Economy and the Two Lost Decades (Nikkei Publishing Inc., in Japanese) and, with Tsutomu Miyagawa, the editor of Productivity and Japan’s Economic Growth: Industry-Level and Firm-Level Studies Based on the JIP Database (University of Tokyo Press, in Japanese).