TOE Alert: Is Japan's Potential Growth Really As Low as 0.5%, Part 4

posted by Richard Katz on December 01, 2015

Found in Japan, categorized in Macro

Tags: Richard Katz TOE Japan economy

Report Cover


Compared to other rich countries, Japan is not getting as much bang for the KBC buck, nor from its hefty R&D buck.


Key points:


·       Productivity is boosted not just by giving workers more tools, but smarter ones

·       Japan invests a lot in knowledge-based capital (KBC), e.g. R&D and software

·       However, it gets less of a productivity benefit from KBC than other countries

·       One reason is that it invests less, and less skillfully, in “economic competencies,” the worker skills and corporate strategies that convert technological advancement into topflight commercial advantage either via new products like smartphones or better processes, as Toyota had done with just-in-time manufacturing

·       Japan’s “total factor productivity (TFP)” in manufacturing has not improved as much as in other countries, meanwhile its TFP in the entire rest of the economy topped out in 1991(!) and has not improved since then

·       For example, Japan’s corporate managers have seen software more as a route to cutting costs than in creating strategic advantage

About Richard Katz

Richard Katz is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

Request a speaking engagement