Japan's Growing Technological Capability Implications for the U.S. Economy (1992) / Chapter Skim
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Technology, Productivity, and the Competitiveness of U.S. and Japanese Industries
Technology, Productivity, and the Competitiveness of U.S. and Japanese Industries
Pages 83-97
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From page 83... ...
2 Satisfactory answers to these questions require a detailed analysis of the international competitiveness of Japanese and U.S. industries.
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From page 84... ...
labor forces into account, the cost of an hour worked in Japan in 1970 was less than one-quarter the cost of an hour worked in the United States. This labor cost advantage enabled Japanese industries to overcome the formidable disadvantages of higher capital and energy costs and lower productivity.
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From page 85... ...
International competitiveness between Japan and the United States since 1970 has been driven almost entirely by dramatic and continuing depreciation of the dollar. Krugman has shown that trade imbalances in both countries in the early 1980s have now receded, following an adjustment process that has resulted in stunning increases in U.S.
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From page 86... ...
industries is to measure relative levels of productivity for all industries. We present comparisons of productivity levels between the United States and Japan by industry in the third section.
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From page 87... ...
We estimate these margins from the interindustry transactions tables for 1970 for both countries. We can account for movements in the relative prices of industry outputs in Japan and the United States by changes in relative input prices and changes in relative productivity levels.
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From page 88... ...
According to our purchasing power parities for industry output in 1970, prices in Japan were higher than those in United States in only six sectors—agr~culture-forestry-fisher~es; construction; food and kindred products; petroleum refinery and coal products; rubber products; and finance, insurance, and real estate. The purchasing power parities for labor input in 1970 represent substantially lower costs of labor input in Japan relative to the United States.
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From page 89... ...
The cost of intermediate inputs in Japan, other than energy, was between 60 and 90 percent of the cost in the United States in 1970, but the cost of energy was higher in Japan. Table 3 presents time series for price indices of aggregate value-added TABLE 3 Aggregate Price Index Denominated by PPP Index in Japan and the United States: Value-Added Deflator, Capital Input Price, and Labor Input Price (1)
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From page 90... ...
Table 4 gives average annual growth rates of input prices in Japan and the United States in the 1960s, 1970s, and 1980s at the industry level. The growth rates of the cost of capital in Japan were almost double those of the United States in the 1960s.
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From page 91... ...
industries relative to their Japanese counterparts. RELATIVE PRODUCTIVITY LEVELS In this section we estimate relative levels of productivity in Japan and the United States for each of the 29 industries included in our study.
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From page 92... ...
It is difficult to assess the validity of our industrial taxonomy by using the added observations for the period 1980-1985, due to fluctuations of productivity growth by industry. As an illustration, according to the new evidence on the productivity gap between Japan and the United States in the motor vehicles industry during the period 1980-1985, the gap had closed by 1979.
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From page 93... ...
CONCLUSION During the period 1960-1973, productivity growth in Japan exceeded that in the United States for almost all industries. After the energy crisis in 1973, there were very few significant differences between growth rates of productivity in Japanese and U.S.
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From page 94... ...
94 JAPAN'S GROWING TECHNOLOGICAL CAPABILITY U' CO 0 ~ ~ ~ ~ ~ 0 ~ ~ In _ 0 0 ~ — t— ~— of _ ~ =\ to ~ ~ ~ Us o o oo ~ ~ ~ ~ Do ~ ~ ~ ~ ~ ~ o ~ o U
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From page 96... ...
Attempts to link trade imbalances in Japan and the United States to relative technological performance are inconsistent with the implications of the extensive body of empirical evidence we have assembled. The sharp deterioration in the U.S.
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From page 97... ...
By focusing on the simple and intuitive concept of relative prices of outputs, expressed in a common currency, economists can do much to dispel this rhetorical fog. Tracing this notion of international competitiveness to its sources in costs of capital and labor and, most critically, the yen-dollar exchange rate can help illuminate trade policy issues on both sides of the Pacific.
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