A Comparative Analysis of Productivity Growth and Productivity Dispersion: Microeconomic Evidence Based on Listed Firms from Japan, Korea, and China

Keiko Ito ; Moosup Jung ; YoungGak Kim ; Tangjun Yuan

Associate Professor, Faculty of Economics, Senshu University, 2-1-1, Higashi-Mita, Tama-ku, Kawasaki 214-8580, Japan, Tel: +81-44-900-7818, Fax: +81-44-911-0467 keiko-i@isc.senshu-u.ac.jp
Doctor, Department of Economics, Seoul National University, Korea econ@snu.ac.kr
Ph.D. Candidate, Graduate School of Economics, Hitotsubashi University, Japan younggak_kim@yahoo.co.jp
Research Fellow, Institute of Economic Research, Hitotsubashi University, Japan en@ier.hit-u.ac.jp

JEL Classification: D24, L25, O53, O57

Abstract

Utilizing the firm-level dataset, this study aims to explore differences in firm-level productivity and growth between Japan, Korea, and China. Our main results can be summarized as follows. First, although Japanese firms enjoy the highest average TFP level in many industries, their TFP growth rate has been relatively low during the past two decades. Korean firms have achieved considerable TFP growth in certain industries. The average TFP level of Chinese firms is still much lower than that of Japanese and Korean firms in many industries. Second, within-industry dispersion of TFP levels is very small for Japanese firms. Third, in Korea, the TFP levels of lowperforming firms are approaching those of the national frontier firms at a more rapid pace than in Japan.

Keywords:

Total factor productivity, Micro data, TFP growth, Productivity dispersion, Listed firms, Japan, Korea, China

Acknowledgments

A previous version of this paper was presented at the 15th Seoul Journal of Economics International Symposium, Productivity and Performance of the Firms in Korea, Japan, and China (sic), October 23, 2007, Seoul National University, Seoul, Korea. The authors are grateful to Wooseok Ok, Yoshitsugu Kitazawa, and other conference participants for helpful comments.

References

Baily, Martin, Hulten, Charles, and Campbell, David. “Productivity Dynamics in Manufacturing.” Brookings Papers on Economic Activity: Microeconomics (1992): 187-267. [https://doi.org/10.2307/2534764]
Barro, Robert J., and Sala-i-Martin, Xavier. Economic Growth. 2^nd Edition, Cambridge, MA: MIT Press, 2004.
Bartelsman, Eric, and Doms, Mark. “Understanding Productivity: Lessons from Longitudinal Micro-Data.” Journal of Economic Literature 38 (No. 3 2000): 569-94. [https://doi.org/10.1257/jel.38.3.569]
Bartelsman, Eric, Haltiwanger, John, and Scarpetta, Stefano. Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries. IZA DP 1374, Bonn: Institute for the Study of Labor, 2004. [https://doi.org/10.1596/1813-9450-3464]
Bartelsman, Eric, Haltiwanger, John, and Scarpetta, Stefano. Measuring and Analyzing Cross-country Differences in Firm Dynamics. Paper Presented at the 2^nd Consortium Meeting of EU KLEMS, Helsinki, June 9-11, 2005.
Bartelsman, Eric, Haskel, Jonathan, and Martin, Ralf. Distance to Which Frontier? Evidence on Productivity Convergence from International Firm-Level Data. Paper Presented at the 2006 International Comparative Analysis of Enterprise (Micro) Data Conference, Chicago, September 18-19, 2006.
Bartelsman, Eric, Scarpetta, Stefano, and Schivardi, Fabiano. Comparative Analysis of Firm Demographics and Survival: Macro-Level Evidence for the OECD Countries. OECD Economic Department Working Papers 348, Paris: Organisation for Economic Co-operation and Development, 2003.
Dowrick, Steve, and Gemmell, Norman. “Industrialisation, Catching up and Economic Growth: A Comparative Study across the World’s Capitalist Economies.” Economic Journal 101 (No. 405 1991): 263-75. [https://doi.org/10.2307/2233817]
Fukao, Kyoji, Inui, Tomohiko, Kabe, Shigesaburo, and Liu, Deqiang. “International Comparison of TFP Levels in Japanese, Korean, and Chinese Listed Firms.” Forthcoming in Seoul Journal of Economics, 2008.
Fukao, Kyoji, and Kwon, Hyeog Ug. “Why Did Japan’s TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms.” Japanese Economic Review 57 (No. 2 2006): 195-228. [https://doi.org/10.1111/j.1468-5876.2006.00359.x]
Good, David H., Nadiri, M. Ishaq, and Sickles, Robin C. “Index Number and Factor Demand Approaches to the Estimation of Productivity.” in M. Hashem Pesaran and Peter Schmidt (eds.), Handbook of Applied Econometrics: Microeconomics. Vol. II, pp. 14-80, Oxford: Blackwell, 1997. [https://doi.org/10.3386/w5790]
Griffith, Rachel, Redding, Stephen, and Simpson, Helen. Productivity Convergence and Foreign Ownership at the Establishment Level. CEPR Discussion Paper 3765, London: Centre for Economic Policy Research, 2002. [https://doi.org/10.1920/wp.ifs.2002.0222]
Hall, Robert E., and Jones, Charles I. “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics 114 (No. 1 1999): 83-116. [https://doi.org/10.1162/003355399555954]
Kim, Young Gak, Kwon, Hyeog Ug, and Fukao, Kyoji. Kigyo Jigyosho no Sannyu Taishutsu to Sangyo Reberu no Seisansei [Entry and Exit of Firms or Plants and Industry-Level Productivity]. RIETI Discussion Paper Series 07-J-022, Research Institute of Economy, Trade and Industry, 2007 (in Japanese).
Kojima, Kiyoshi. Gankogata Keizai Hatten-ron 1: Nihon Keizai, Ajia Keizai, Sekai Keizai [The Flying-Geese Pattern of Economic Development, Volume 1: The Japanese Economy, the Asian Economy, and the World Economy]. Tokyo: Bunshindo. 2003 (in Japanese).
Motohashi, Kazuyuki. Assessing Japan’s Industrial Competitiveness by International Productivity Level Comparison with China, Korea, Taiwan, and United States. Paper Presented at the International Conference on Productivity and Efficiency, Academia Sinica Economic Institute, Taipei, June 20, 2005.
Nishimura, Kiyohiko G., Nakajima, Takanobu, and Kiyota, Kozo. Innovation versus Diffusion: Determinants of Productivity Growth among Japanese Firms. CIRJE Discussion Paper Series CIRJE-F-350, Center for International Research on the Japanese Economy, University of Tokyo, 2005.
Olley, Steve G., and Pakes, Ariel. “The Dynamics of Productivity in the Telecommunications Equipment Industry.” Econometrica 64 (No. 6 1996): 1263-97. [https://doi.org/10.2307/2171831]