Productivity Drag from Small and Medium-Sized Enterprises in Japan

Productivity growth in Japan, as in most advanced economies, has moderated. This paper finds supportive evidence for the important role of small and medium-sized enterprises (SMEs) in explaining Japan’s modest productivity growth. Results show a substantial dispersion in firm-level productivity grow...

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Bibliographic Details
Main Author: Colacelli, Mariana
Other Authors: Hong, Gee Hee
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2019
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a Japan 
653 |a Small business 
653 |a Investment 
653 |a Productivity 
653 |a Ownership & organization of enterprises 
653 |a Industrial productivity 
653 |a Production 
653 |a Small and medium enterprises 
653 |a Corporate Finance and Governance: General 
653 |a Skills 
653 |a Intangible Capital 
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653 |a Corporate Finance 
653 |a National accounts 
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653 |a Saving and investment 
653 |a Investments: General 
653 |a Macroeconomics 
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653 |a Intangible capital 
653 |a Capacity 
653 |a Labor productivity 
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520 |a Productivity growth in Japan, as in most advanced economies, has moderated. This paper finds supportive evidence for the important role of small and medium-sized enterprises (SMEs) in explaining Japan’s modest productivity growth. Results show a substantial dispersion in firm-level productivity growth across sectors and even across firms within the same sector. SMEs, on average, exhibit lower productivity growth than non-SMEs in Japan, with smaller and older SMEs showing particularly low productivity growth. Estimates suggest that boosting productivity growth in all of the worst-performing SMEs could improve overall productivity growth by up to 1.8 percentage points. The SME credit guarantee system, SME financing constraints, demographic factors, and lack of intangible capital investment are discussed as contributors to the slow productivity growth of Japan’s small and old SMEs