The Effects of New Technology on Productivity: Technological Improvement and Reallocation Efficiency in the Japanese Steelmaking Industry

Ryuki Kobayashi
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Ryuki Kobayashi: Graduate School of Economics, Keio University

No 2022-002, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: This paper analyzes the effect of new technology for steel refining - the basic oxygen furnace (BOF)- on productivity growth using the productivity decomposition method. I employ a technique that decomposes productivity growth into four factors: operational improvement, within- and between-technology reallocation, and entry-exit effects. I demonstrate that the following two factors were equally important: (i) the rapid operational progress of new technology and (ii) between-technology reallocation both among existing furnaces and through entries (new construction). I also find that although the overall allocation efficiency improved, the within-BOF allocation efficiency declined. The results suggest that productivity growth followed the spread of BOF with rapid technological advancement while sacrificing allocative efficiency within the BOF furnaces.

Keywords: Productivity; Productivity decomposition; Between-technology reallocation; Technology; Steelindustry (search for similar items in EconPapers)
JEL-codes: D24 L61 O33 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2022-02-13
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