Productivity Drag from Small and Medium-Sized Enterprises in Japan

July 1, 2019

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Mariana Colacelli, and Gee Hee Hong. Productivity Drag from Small and Medium-Sized Enterprises in Japan, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Economic sectors, Intangible capital, Labor productivity, National accounts, Production, Productivity, Small and medium enterprises

Keywords: Exit rate, Financing constraint, Firm, Firm Dynamics, Global, Intangible capital, Intangible Investment, Labor productivity, Laggard SME, Productivity, Productivity growth, Sluggish SME productivity growth, Small and medium enterprises, Small and Medium-Sized Enterprises, SME, SME business manager succession, SME characteristic, SME credit guarantee program, SME credit guarantee system, SME firm, SME guarantee, SMEs Labor Productivity Growth, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/137
Stock No:

WPIEA2019137
ISBN:

9781498317474
ISSN:

1018-5941

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