A Survey on Intangible Capital

This study provides a survey of topics related to intangible capital, including concepts, definitions, measurement issues, and classifications. It shows that despite the growing importance of intangible capital, we do not know enough about it and only have imperfect methods of measuring it. While at the macroeconomic level, measurement of intangibles is now available for many countries, definitional and measurement issues pose a greater problem at the microeconomic level. This study points out that researchers not only have to confront data deficiencies but also need to grapple with conceptual issues. Finally, it also provides brief surveys of studies dealing with particular detailed topics. Many of these studies prove the existence of intangible capital at the microeconomic level as well as at macroeconomic level.

Measuring Organization Capital in Japan: An Empirical Assessment Using Firm-Level Data

Globalization and the ICT revolution of the 1990s have forced many firms to reorganize in order to survive in a more competitive market. There are several approaches that can be used to assess the measurement of organization capital since it is unobservable. Using an optimizing firm model and assuming that a firm holds multiple assets as suggested by Yang and Brynjolfsson (2001) and Cummins (2005), we examined whether organization capital is accumulated with investment in several types of assets. In contrast to Cummins's (2005) results, we found that the accumulation of organization capital is associated with investment in R&D assets and marketing assets. Using these results and following Basu, Fernald, Oulton, and Srinivasan (2003), we measured the contribution of organization capital to the conventional TFP growth. The estimation results implied that the growth of organization capital did not have significant effects on productivity growth.adjustment cost of investment, intangible asset, organizational capital, Tobins q, total factor productivity.

Plant Turnover and TFP Dynamics in Japanese Manufacturing

This study analyzes the cause of the slowdown in Japan's TFP growth during the 1990s. Many preceding studies, examining the issue at the macro- or industry-level, have found that the slowdown was primarily due to the stagnation in TFP growth in the manufacturing sector. Using establishment level panel data covering the entire sector, we investigate the causes of the TFP slowdown and find that the reallocation of resources from less efficient to more efficient firms was very slow and limited. This "low metabolism" seems to be an important reason for the slowdown in Japan's TFP growth.

An International Comparison of the TFP Levels and the Productivity Convergence of Japanese, Korean, Taiwanese, and Chinese Listed Firms (Extended Version)

Focusing on Japanese, Korean, Taiwanese, and Chinese firms in the manufacturing sector, this paper examines productivity catch-up at the firm level using the distance from the technology frontier as a direct measure of the potential for catch-up. We also examine the role of absorptive capacity for technological catch-up by including variables such as R&D expenditure and foreign ownership in our empirical estimation. We find that the national frontier has a stronger pull on domestic firms than the regional frontier, which is in line with findings by Bartelsman, Haskel and Martin (2008). This result indicates that policies to raise the technology level of national frontier firms are beneficial for all firms in that country.productivity, catch-up, absorptive capacity

Ownership Structure and TFP: Evidence from Japanese firms (Japanese)

This paper compares the performances of firms - such as affiliates of U.S. firms, affiliates of other foreign firms, affiliates of Japanese firms, Japanese multinational firms, and stand-alone Japanese firms - by their ownership structure and how they positively contribute to productivity growth and employment in industry as a whole, using the firm level data of the Basic Survey of Japanese Business Structure and Activities for the period 2000-2005. We show that the productivity level, the average wage, and the export intensity of the affiliates of U.S. firms and other foreign firms are higher than for Japanese firms, whereas their capital-labor ratio and R&D intensity are not significantly different from those of Japanese firms. Affiliates of U.S. firms, in particular, show best performance in their TFP level. We also confirm that the contribution of the foreign affiliates in both productivity growth and employment growth in each industry is positive.

Do More Productive Firms Locate New Factories in More Productive Locations? An empirical analysis based on panel data from Japan's Census of Manufactures

Using a Melitz-style model of heterogeneous firms, Baldwin and Okubo (2006) recently presented a theoretical model in which self-sorting occurs and more productive factories choose to locate in more productive areas. The model suggests that firm-specific factors and regional factors affect each other through the endogeneity of location decisions. However, to date there have been few studies empirically testing this issue. Against this background, our aim is to examine the relationship between firms and location-specific factors in location decisions using factory-level panel data from Japan's Census of Manufactures. We begin by estimating how much of the differences in factories' TFP levels can be explained by both firm and location effects. The estimation results show that both effects have a significant impact on the productivity level of a factory, and that the firm effects are more important than the location effects. We also find a statistically significant negative correlation between firm effects and location effects, and investigate what causes this relationship. One potential explanation is that more productive firms may tend to set up new factories in less productive locations such as rural areas, where factor prices such as land prices and wage rates are usually low, in order to benefit from low factor prices. To examine this issue, we estimate a mixed logit model of location choice. The results indicate that more productive firms indeed tend to set up new factories in low-productivity locations, which is consistent with our hypothesis.

Why Has Japan's TFP Growth Recovered?: An empirical analysis based on the basic survey of Japanese business structure and activities (Japanese)

According to growth accounting analysis based on the JIP Database 2008, the growth of Japan's total factor productivity (TFP) has accelerated in the first decade of this century, centered on nonmanufacturing industry, and TFP in manufacturing industry has also recovered since 2001. In addition, the growth in TFP in nonmanufacturing industry has occurred amid a decline in labor, capital services, and intermediate inputs. In this paper we use micro data in the Basic Survey of Japanese Business Structure and Activities from 1994 to 2005 to find out what kind of mechanism has given rise to this acceleration of Japan's TFP growth, and what kinds of firms have succeeded in enhancing their productivity. We first analyze the productivity dynamics after decomposing the rate of TFP growth into internal, redistribution, and entry-exit effects, finding that in both manufacturing and nonmanufacturing industry the acceleration of TFP growth in the 21st century is an internal effect (acceleration of TFP growth within firms). A modest improvement in the metabolic function is observed, but the exit effect has been negative in many industries during the 2000s. Next, we use data confined to only continuing firms to analyze why the internal effect has been rising, finding that much of the acceleration of TFP growth in the Japanese economy has been achieved by corporate restructuring. In other words, despite falls in labor, capital service, and intermediate inputs, production volume has been maintained or has declined only slightly. We find also that this restructuring is being conducted primarily by firms facing global competitive pressure, such as exporters, multinational firms, and firms oriented towards R&D. In the case of the upper 25% of firms in each industry with high debt-equity ratios, we find that initial TFP levels are markedly low relative to those of other firms, but are raised by substantially reducing inputs of all factors of production, even when economic conditions are healthy. Also, it is possible that the approach to resolving the problem of zombie firms in Japan lies not in exiting but in restructuring.