Information Technology and Economic Growth: A Comparison between Japan and Korea

Kazuyuki Motohashi ; Takahito Kanamori

Professor, Department of Technology Management for Innovation, Graduate School of Engineering, University of Tokyo, 7-3-1 Hongo, Bunkyou-ku, Tokyo 113-8656, Japan, Tel: +81-3-5841-1828, Fax: +81-3-5841-1829 motohashikazuyuki@tmi.t.u-tokyo.ac.jp
Ph.D., Department of Advanced Interdisciplinary Studies, Graduate School of Engineering, University of Tokyo

JEL Classification: O30, O47, O53

Abstract

In this paper we compare sources of economic growth in Japan and Korea from 1985 to 2004, focusing on the role of information technology (IT), based on the framework of Jorgenson and Motohashi (2005). In both countries, the information technology industry is an important source of economic and productivity growth from the output side. In addition, active IT investments are supposed to lead to substantial IT capital service contribution to economic growth from the input side.

Keywords:

Information technology, Productivity, Japan, Korea

Acknowledgments

We would like to thank Mr. Changsik Shin at the Bank of Korea for his kind support about Korean input and output tables and IT price data. The data series in this paper will be provided by authors upon request.

References

Bank of Korea. 2000 Input-Output Tables. Bank of Korea, 2003.
Colecchia, A., and Schreyer, P. “ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries.” Review of Economic Dynamics 5 (No. 2 April 2002): 408-42. [https://doi.org/10.1006/redy.2002.0170]
Fukao, K., Miyagawa, T., and Takizawa, M. Productivity Growth and Resource Reallocation in Japan, Hitotsubashi Hi-Stat Working Paper No. 224, November 2007.
Ha, B. C., and Pyo, H. K. “The Measurement of IT Contribution by Decomposed Dynamic Input-Output Tables in Korea (1980-2002).” Seoul Journal of Economics 17 (No. 4 2004): 511-46.
Jorgenson, D. W. “The Embodiment Hypothesis.” In Postwar U.S. Economic Growth, Productivity. Chapter 2, Vol. 1, Cambridge: The MIT Press, 1995.
Jorgenson, D. W. “Information technology and the U.S. economy.” American Economic Review 91 (No. 1 2001): 1-32. [https://doi.org/10.1257/aer.91.1.1]
Jorgenson, D. W., and Motohashi, K. “Information Technology and the Japanese Economy.” Journal of the Japanese and International Economies 19 (No. 4 December 2005): 460-81. [https://doi.org/10.1016/j.jjie.2005.05.001]
Kanamori, T., and Motohashi, K. Centralization or Decentralization of Decision Rights? Impact on IT Performance of Firms. RIETI Discussion Paper Series 06-E-032, 2006.
Keio University Institute for Economic and Industry Studies (Keio Economic Observatory). KEO Database, Keio Economic Observatory Monograph Series No. 8, 1996.
Kuroda, M., Motohashi, K., and Shimpo, K. Investigating Productivity Slowdown in the 1990s by using KLEM Database in Japan. RIETI ICPA Project, 2006.
Motohashi, K. IT Investment and Productivity Growth of Japanese Economy and Comparison to the United States. RIETI Discussion Paper Series 02-J-018, 2002 (in Japanese).
Motohashi, K. “Firm-level analysis of information network use and productivity in Japan.” Journal of the Japanese and International Economies 21 (No. 1 March 2007): 121-37. [https://doi.org/10.1016/j.jjie.2005.08.001]
NIPSSR. Population Projections for Japan: 2001-2050. National Institute of Population and Social Security Research, January 2002.
Nomura, K., and Samuels, J. Can We Go Back to Data? Reconsideration of US Harmonized Computer Prices in Japan. Program on Technology and Economic Policy, Harvard University, 2004.
Parker, R., and Grimm, B. Recognition of Business and Government Expenditures for Software as Investment: Methodology and Quantitative Impacts, 1959-98. BEA, U.S.: Department of Commerce, 2000.
Pyo, H. K., Rhee, K. H., and Ha, B. Growth Accounting and Productivity Analysis by 33 Industrial Sectors in Korea (1984-2002). RIETI-ICPA Project, 2005, August 26, 2006.
Van Ark, B., Melka, J., Mulder, N., Timmer, M., and Ypma, G. ICT Investment and Growth Accounts for the European Union 1980-2000. Research Memorandum, University of Groningen, 2002.