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Productivity Improvement and Economic Growth

Koji Nakamura, Sohei Kaihatsu and Tomoyuki Yagi
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Koji Nakamura: Bank of Japan
Tomoyuki Yagi: Bank of Japan

No 18-E-10, Bank of Japan Working Paper Series from Bank of Japan

Abstract: This paper summarizes recent discussion on labor productivity which is the source of medium- to long-term economic growth and observes the characteristics of recent productivity developments using relevant statistical data. Furthermore, the paper examines the background of recent Japan's low labor productivity growth and analyzes issues regarding Japan's sustainable growth.Labor productivity in major advanced countries has been experiencing a slowdown in recent years. This is mainly affected by the slowdown of Total Factor Productivity (TFP). In Japan, there are two reasons behind the slowdown: first, technology and ideas accumulated by research and development (R&D) and management resources such as capital and labor are not utilized efficiently; and second, these resources are not efficiently reallocated among corporations.In order to improve Japan's productivity in the medium to long-term, it is desirable to encourage the flexible reallocation of management resources such as capital and labor by changing working process at the corporate level in accordance with changes in the socio-economic environment and the advent of new technologies, as well as by improving efficiency in the labor and capital markets.

Keywords: Productivity; Potential growth; Intangible assets; Resource reallocation (search for similar items in EconPapers)
JEL-codes: E20 O30 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-mac
Date: 2018-05-10
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