From Productivity Analysis in Asia to Creating Asia KLEMS Database The 1st World KLEMS Conference August 19-20, 2010 Tsutomu Miyagawa (GakushuinUniversity) 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 вЂў Asia is growth engine of the world economy. вЂў Productivity data as well as several kinds of economic indicators should be compiled accurately and publicly available. вЂў 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 вЂў вЂў вЂў вЂў вЂў вЂў вЂў 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 1990s. 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/JIP2009/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.) вЂў At the same time, Professor Pyo of Seoul National University started the KIP database project. вЂў The KIP database also follows the standard method in the KLEMS project. вЂў The KIP database has been published on the Korea Productivity Center Website (http://www.kpc.or.kr/eng/state/2009_kip.) since 2007. вЂў The JIP database team and the KIP database team share information on productivity databases and productivity growth in both countries every year. вЂў Both team members have provided their data to EUKLEMS database. An Overview of JIP Database and KIP Database JIP Database 2009 Industry Classification 108 industries (including 52 manufacturing industries) Estimation period is from 1970 to 2006 Estimation Period (output and intermediate inputs are estimated from 1973 to 2006) KIP Database Following the industry classification in EUKLEMS Database, it covers 72 industries (including 31manufacturing industries) Estimation period is from 1970 to 2007. Gender :2 classifications Gender :2 classifications Age: 11 classifications Age: 5 classifications Employment status: 3 classifications Labor sklii: 3 classifications Labor Account Education: 4 classifications Capital Account Capital asset is classified into 37 types. Depreciation rate is the same as that published by BEA 8 types of capital assets. Depreciation rate is measured by using National Wealth Survey. (Source) JIP Database: Fukao et,al (2007) and KIP http://www.rieti.go.jp/en/database/JIP2009 Database:http://www.kpc.or.kr/eng/state/2 /index.html 009_kip.asp?c_menu=5&s_menu=5_4 3. Productivity Analysis in Japan and Korea вЂў 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. вЂў 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. вЂў In Korea, a high capital accumulation rate has supported their high economic growth rate. Growth accounting including ICT capital service (Market economy)(%) Value added Labor Man-hour Labor quality Capital ICT capital Non-ICT capital MFP 1980-1995 Korea Japan 9.5 3.9 2.2 0.4 1.6 0.1 0.6 0.3 7.1 2.0 0.7 0.5 6.5 1.5 0.2 1.5 1995-2000 Korea Japan 5.0 1.0 0.2 -0.4 -0.2 -0.9 0.5 0.4 3.9 1.1 0.7 0.5 3.1 0.6 0.8 0.4 Source: JIP Database and KIP Database. *Growth accounting in Japan was conducted for the period 2000-2006 2000-2007 Korea Japan* 4.6 1.0 0.8 -0.7 0.1 -1.0 0.7 0.4 2.5 1.1 0.4 0.4 2.2 0.6 1.3 0.6 3. Productivity Analysis in Japan and Korea (contd.) вЂў 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. вЂў In Japan, productivity in the manufacturing sector (with the exception of ICT industries) slowed down after 1995. вЂў 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 0.0 -0.5 US Italy UK France Korea Japan Germany -1.0 US 0.0 Italy 2.0 UK 0.5 Japan 4.0 France 1995-2006 Germany 1995-2006 1980-1995 1.0 Korea 6.0 International Comparison in MFP Growth in the Service Sector Distribution services Personal and social services 2.0 4.0 1.0 3.0 1.0 1980-1995 1995-2006 -3.0 US Italy UK France Germany Korea Japan -2.0 US Italy UK France Germany 1980-1995 -2.0 0.0 -1.0 Korea -1.0 Japan 0.0 2.0 -3.0 -4.0 -5.0 -6.0 1995-2006 3. Productivity Analysis in Japan and Korea (contd.) вЂў The Korean economy has aggressively accumulate ICT equipments. вЂў In contrast to Korea, the ICT investment/GDP ratio in Japan has been declining in the 21st century. вЂў In particular, the contribution of ICT assets to economic growth is low in the Japanese service sector. Contributions of ICT Capital Service Input Growth to Economic Growth (%) Japan 0.50 1995-2000 Korea 0.73 US 0.57 1.30 0.47 0.82 0.77 0.59 0.45 0.32 0.95 0.24 0.21 0.39 0.31 0.22 0.09 0.64 0.12 0.11 0.32 .Distribution services 0.16 0.69 0.53 0.08 0.23 0.54 .Finance and business services 0.45 1.19 0.75 0.37 0.62 1.04 .Personal and social services 0.12 1.45 0.57 0.08 0.15 0.17 Market economy total .Electrical machinery, post and communication .Manufacturing, excluding electrical .Other goods producing industries (Source) EUKLEMS Database, November, 2009 *2000-2006 2000-2007 Japan* Korea 0.37 0.36 US 0.57 4. Productivity Analysis in Other Asian Countries вЂў Productivity analysis in Asian countries including Japan and Korea started in the mid 2000s. вЂў 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/d03.html) в†’Jorgenson, Kuroda, and Motohashi published Productivity in Asia (Edward Elgar, 2007). The Structure of ICPO Project Industry Classification Estimation Period Labor Account Capital Account 33 industries (including 20 manufacturing industries) 1980-2000 Gender: 2 classifications Age: 3 classifications Education: 3 classifications 3 types of assets (Source) http://www.rieti.go.jp/en/database/d03.html 4. Productivity Analysis in Other Asian Countries (contd.) вЂў The Asia Productivity Organization (APO) has published its productivity database since 2007. (http://www.apo-tokyo.org/index.htm) вЂў The KEO database team collaborates with the APO for the compilation of this database. вЂў This database shows the labor productivity in 20 Asian countries (+China). 4. Productivity Analysis in Other Asian Countries (contd.) вЂў Using PPP, the database shows international productivity levels of the Asian countries. вЂў Aggregate TFP growth data is also available for China, Korea, Japan, and Taiwan. вЂў 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 (%) Manufacturing Mongolia Kore a China Iran Malays ia Indone s ia Pakis tan Taiwan Japan Vie tnam Banglade s h Philippine s Singapore Thailand Fiji Cambodia Hong Kong India Sri Lanka Ne pal Se rvice 8.7 7.2 7.1 6.5 5.3 4.4 4.2 4.2 4.1 3.4 3.3 3.0 2.5 2.5 1.6 1.6 0.3 -0.4 -0.6 -4.0 (Source ) APO Productivity Databook 2009 India China Indone s ia Hong Kong Malays ia Philippine s Banglade s h Sri Lanka Vie tnam Singapore Pakis tan Iran Kore a Taiwan Thailand Mongolia Fiji Japan Ne pal Cambodia 5.9 5.6 4.4 4.0 2.5 2.5 2.4 2.3 2.1 1.9 1.6 1.2 1.1 1.1 1.1 1.0 0.8 0.7 -1.3 -3.0 5. Proposals for Creating Asia KLEMS Database вЂў 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.