From Productivity Analysis in Asia to Creating Asia

From Productivity Analysis in Asia to Creating Asia KLEMS Database The 1 st World KLEMS Conference August 19 -20, 2010 Tsutomu Miyagawa (Gakushuin. University)

Contents 1. An Overview of Productivity Databases in Asia 2. Japan Industrial Productivity (JIP) Database and Korea Industrial Productivity (KIP) Database 3. Productivity Analysis in Japan and Korea 4. Productivity Analysis in Other Asian Countries 5. Proposals for Creating Asia KLEMS Database

1. An Overview of Productivity Databases in Asia • Asia is growth engine of the world economy. • Productivity data as well as several kinds of economic indicators should be compiled accurately and publicly available. • To achieve the above objectives, we need to share information on our databases.

Productivity Databases in Asia JIP Database sharing information KIP Database providing data EUKLEMS Database sharing information CIP Database in progress APO Productivity Databook measurement in aggregate TFP growth in Japan, Korea, China, and Taiwan and labor productivity data in 20 Asian countries (+China)

2. Japan Industrial Productivity (JIP) Database and Korea Industrial Productivity (KIP) Database • • Professor Kuroda of Keio University is the pioneer of productivity analysis in Japan. Professor Kuroda and other researchers at Keio University compiled a productivity database (called KEO database) in the 1990 s. Following the KEO database, Professor Fukao and I started the JIP database project in 1999, because we were interested in the productivity slowdown in Japan. Every part (I-O, labor account, capital account) of the JIP database follows a standard method in the KLEMS project. At first, the JIP database project was supported by the Economic and Social Research Institute (ESRI) in the Cabinet Office. The project was then moved to the Research Institute of Economics, Trade, and Industry (RIETI) in 2004. The JIP database is revised every year and is published on the RIETI Website(http: //www. rieti. go. jp/en/database/JIP 2009/index. html) Compared to the KEO database, the JIP database has more detailed industry classifications in the service sector.

2. Japan Industrial Productivity (JIP) Database and Korea Industrial Productivity (KIP) Database (contd. ) • At the same time, Professor Pyo of Seoul National University started the KIP database project. • The KIP database also follows the standard method in the KLEMS project. • The KIP database has been published on the Korea Productivity Center Website (http: //www. kpc. or. kr/eng/state/2009_kip. ) since 2007. • The JIP database team and the KIP database team share information on productivity databases and productivity growth in both countries every year. • Both team members have provided their data to EUKLEMS database.

3. Productivity Analysis in Japan and Korea • Growth accounting in Japan and Korea showed the slowdown in growth in Japanese value added after 1995, while the Korean economy has maintained 5% growth rate. • In Japan, not only the negative growth rate in labor input that resulted from the low birth rate, but also the slowdown in capital accumulation and productivity were the reasons for the low growth rate for 15 years. • In Korea, a high capital accumulation rate has supported their high economic growth rate.

3. Productivity Analysis in Japan and Korea (contd. ) • When we examine productivity growth by industry, the manufacturing sector, particularly ICT industries (electric machinery, post and communication industries) in Korea marked high productivity growth. • In Japan, productivity in the manufacturing sector (with the exception of ICT industries) slowed down after 1995. • Productivity growth in the service sector in both countries is low.

International Comparison in MFP Growth in the Manufacturing Sector Manufacturing, excluding electrical machinery Electrical machinery, post and communication 14. 0 3. 0 12. 0 2. 5 10. 0 2. 0 8. 0 1. 5 1980 -1995 US Italy -1. 0 US Italy UK France -0. 5 UK 0. 0 France 0. 0 Germany 2. 0 Korea 0. 5 Japan 4. 0 Germany 1995 -2006 Korea 1995 -2006 1980 -1995 1. 0 Japan 6. 0

International Comparison in MFP Growth in the Service Sector Distribution services Personal and social services 2. 0 4. 0 1980 -1995 -2. 0 -3. 0 US Italy UK France Korea Japan Germany -1. 0 US Italy UK France 1980 -1995 -2. 0 1995 -2006 0. 0 Germany -1. 0 Korea 0. 0 2. 0 Japan 1. 0 3. 0 -4. 0 -5. 0 -6. 0 1995 -2006

3. Productivity Analysis in Japan and Korea (contd. ) • The Korean economy has aggressively accumulate ICT equipments. • In contrast to Korea, the ICT investment/GDP ratio in Japan has been declining in the 21 st century. • In particular, the contribution of ICT assets to economic growth is low in the Japanese service sector.

4. Productivity Analysis in Other Asian Countries • Productivity analysis in Asian countries including Japan and Korea started in the mid 2000 s. • The International Comparison of Productivity among Asian Countries (ICPA) project compiled the productivity database in China, Korea, Japan, and Taiwan. (http: //www. rieti. go. jp/en/database/d 03. html) →Jorgenson, Kuroda, and Motohashi published Productivity in Asia (Edward Elgar, 2007).

4. Productivity Analysis in Other Asian Countries (contd. ) • The Asia Productivity Organization (APO) has published its productivity database since 2007. (http: //www. apo-tokyo. org/index. htm) • The KEO database team collaborates with the APO for the compilation of this database. • This database shows the labor productivity in 20 Asian countries (+China).

4. Productivity Analysis in Other Asian Countries (contd. ) • Using PPP, the database shows international productivity levels of the Asian countries. • Aggregate TFP growth data is also available for China, Korea, Japan, and Taiwan. • Labor productivity series in agriculture, manufacturing, service, and other industries are compiled in 20 Asian countries (+ China).

Cross-country Comparisons of Labor Productivity Growth by industry in Asian Countries, 2000 -06 (%)

5. Proposals for Creating Asia KLEMS Database • Three proposals for towards Asia KLEMS (1) Industry classification: we must start from the low level of industry classifications due to the lack of available data in the higher digit level in many Asian countries. (2) Measuring capital input: we need to measure capital formation series by asset and by industry. (3) Collaboration: like Japan and Korea, we need to share information on data with experts on productivity analysis in universities or research institutes in Asian countries.