The Sun Also Rises: Productivity Convergence Between Japan and the USA

Gavin Cameron

No 45, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: The growth process for a technological leader is different from that of a follower. While followers can grow through imitation and capital deepening, a leader must undertake original research. This suggests that as the gap between the leader and the follower narrows, the follower must undertake more formal R&D and possibly face a slower overall growth rate. This paper constructs measures of relative total factor productivity for eleven Japanese manufacturing industries and uses dynamic panel data methods to test whether a smaller productivity gap leads to slower growth, and whether R&D takes over as the engine of growth as Japan approaches the technological frontier. The results suggest that Japanese and US productivity have been growing at similar rates since the mid-1970s, and that some of the Japanese growth slowdown is attributable to the exhaustion of imitation possibilities.

Keywords: economic growth; total factor productivity; catch-up; innovation; heterogeneous dynamic panels (search for similar items in EconPapers)
JEL-codes: C13 C23 O30 O47 (search for similar items in EconPapers)
Date: 2000
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Journal Article: The Sun Also Rises: Productivity Convergence Between Japan and the USA (2005)
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