Information Technology and the Japanese Economy

35 Pages Posted: 2 Mar 2006  

Dale W. Jorgenson

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Kazuyuki Motohashi

University of Tokyo - Research Center for Advanced Science and Technology (RCAST)

Date Written: November 2005

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.

Suggested Citation

Jorgenson , Dale W. and Motohashi, Kazuyuki, Information Technology and the Japanese Economy (November 2005). NBER Working Paper No. w11801. Available at SSRN: https://ssrn.com/abstract=851710

Dale W. Jorgenson (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Harvard University - Harvard Kennedy School (HKS) ( email )

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Kazuyuki Motohashi

University of Tokyo - Research Center for Advanced Science and Technology (RCAST) ( email )

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Tokyo 153-8904
Japan

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