The Causes of Japan's Economic Slowdown: An Analysis Based on the Japan Industrial Productivity Database

Using the Japan Industrial Productivity Database (JIP) and the EU KLEMS database 2017, we compare the sources of economic growth of Japan, the United States, Germany, France, and the U.K. for the period 1995-2015 using growth accounting. We find that the reasons why Japan's economic growth during the 2005-2015 period was much slower than that of the other major economies are the decline in the working-age population and sluggish investment in capital services. Among the five countries, Japan was the only one whose growth rate of the capital stock was lower than the steady state growth rate. Another reason for the slowdown in Japan's economic growth in 2005-2015 was the decline in TFP growth, which was caused by a drop in productivity growth in a small number of industries, including electronic data processing machines, electricity, and wholesale trade.