Working Paper: NBER ID: w11801
Authors: Dale W. Jorgenson; Kazu Motohashi
Abstract: In this paper we compare sources of economic growth in Japan and the United States from 1975 through 2003, focusing on the role of information technology (IT). We have adjusted Japanese data to conform to U.S. definitions in order to provide a rigorous comparison between the two economies. The adjusted data show that the share of the Japanese gross domestic product devoted to investment in computers, telecommunications equipment, and software rose sharply after 1995. The contribution of total factor productivity growth from the IT sector in Japan also increased, while the contributions of labor input and productivity growth from the Non-IT sector lagged far behind the United States. Our projection of potential economic growth in Japan from for the next decade is substantially below that in the United States, mainly due to slower growth of labor input. Our projections of labor productivity growth in the two economies are much more similar.
Keywords: Information Technology; Economic Growth; Japan; United States
JEL Codes: D24; D30; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| IT investment (G31) | TFP growth in the IT sector (O49) |
| IT investment (G31) | GDP growth (O49) |
| Non-IT sector growth slowdown (O14) | TFP growth rate in Japan (O49) |
| IT production (L86) | Japanese output growth (O49) |
| Labor input growth slowdown (J89) | Economic growth in Japan (O49) |