2008 Reports

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

Ito, Keiko; Jung, Moosup; Kim, Young Gak; Yuan, Tangjun

Utilizing the firm-level dataset, this study aims to explore differences in firm-level productivity and growth between Japan, Korea, and China, while at the same time illuminating the mechanism that has driven the narrowing in the productivity gap that can be observed. We pursue two strategies. First, we compare the firm-level TFP distribution of major industries in these three countries over time to examine catch-up patterns within and across industries. Second, in order to examine patterns of technology diffusion across these three countries, we conduct a regression analysis on TFP convergence to the national frontier and to the global frontier. 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. While the within-industry ranking of TFP levels hardly changes in the case of Japan, fluctuations in the ranking are relatively frequent in the case of Korea. Third, in Korea, the TFP levels of low-performing firms are approaching those of the national frontier firms at a more rapid pace than in Japan.