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Maintaining Economic Dynamism under the Adverse Demographic Conditions of Low Fertility and Agin Policy Research Domains (Major Policy Research Domains) I. Maintaining Economic Dynamism under the Adverse Demographic Conditions of Low Fertility and Aging Population Empirical Analyses Relating to IT and Productivity Print Project Leader/Sub-Leader MOTOHASHI Kazuyuki Faculty Fellow Leader Overview 2008 - 2009Productivity is essential in long term growth of Japan whose working age population is decreasing. In this study, the role of IT on productivity growth is identified by empirical analysis. It is found that the impact of IT on productivity in Japanese firms is smaller than that in U.S. firms. Both macro and micro level analysis is conducted in this project to investigate the reason why IT is under utilized in Japanase firms as compared to U.S. counterparts. 2007Although Japanese firms have actively invested in information technologies (IT) since the second half of the 1990s, it is said these investments have had limited impact on productivity. IT is utilized in a broad range of industries and serves as a critical complementary technology in realizing business innovations in the non-manufacturing sector. Hence, promoting the effective use of IT can have an important impact on TFP on the macro level. The purpose of this project is to undertake international comparison and analysis of the status of IT innovation and its impact on productivity. What are the determinants of productivity in Japan's electronic and software industries? Are Japanese firms failing to make effective use of IT? If so, what are the causes of this failure? In this project, we address these questions by conducting comprehensive macro and micro empirical analysis.2006Japanese companies have been investing actively in information technology (IT) since the second half of the 1990s, but it appears that the impact of this on their productivity has been limited. IT is used in a wide range of industries, and in nonmanufacturing industry in particular it is an important complement technology for realizing business innovation. In view of this, we believe that fostering the effective use of IT will have a major impact on trends in total factor productivity at the macro level. In this research we make comparisons with the United States and certain Asian countries, making comprehensive empirical analyses from both macro and micro perspectives, including from an international standpoint, in order to address the questions of whether the use of IT by Japanese companies is being conducted effectively, what the causes are if that is not the case, and what policy methods are conceivable for promoting the effective use of IT in the future. Until June 30, 2009 Major Research Results 2010 RIETI Discussion Papers 10-E-021 "Empirical Study of IPTV Diffusion: Comparison between Japan and Korea" (KINUGASA Satoshi, MOTOHASHI Kazuyuki, Yeong-Wha SAWNG and TERADA Shinichiro) 10-J-028 "Construction of Electronics Database for East Asian Countries and Empirical Analysis of International Competitiveness of Japanese Companies" (MOTOHASHI Kazuyuki) 2009 RIETI Discussion Papers 09-E-053 "A Two-dimensional Analysis of the Impact of Outward FDI on Performance at Home: Evidence from Japanese manufacturing firms" (OBASHI Ayako, HAYAKAWA Kazuo, MATSUURA Toshiyuki and MOTOHASHI Kazuyuki) 09-E-038 "Software Patent and its Impact on Software Innovation in Japan" (MOTOHASHI Kazuyuki) 09-J-016 "IT Innovation and Economic Growth: The importance of Moore's Law in productivity from a macro perspective" (MOTOHASHI Kazuyuki) 2008 RIETI Discussion Papers 09-E-007 "IT, R&D and Productivity of Chinese Manufacturing Firms" (MOTOHASHI Kazuyuki and YUAN Yuan) 09-E-005 "Technology Spillovers from Multinationals to Local Firms: Evidence from Automobile and Electronics Firms in China" (MOTOHASHI Kazuyuki and YUAN Yuan) 08-E-034 "How Does FDI in East Asia Affect Performance at Home?: Evidence from Electrical Machinery Manufacturing Firms" (MATSUURA Toshiyuki, MOTOHASHI Kazuyuki and HAYAKAWA Kazunobu) 08-E-011 "Impact of the Debt Ratio on Firm Investment: A case study of listed companies in China" (YUAN Yuan and MOTOHASHI Kazuyuki) 09-J-002 "The Software Industry's Multilayered Subcontracting Structure: Empirical analysis of innovation and productivity" (MINETAKI Kazunori and MOTOHASHI Kazuyuki) 08-J-049 "How Does FDI in East Asia Affect Performance at Home?: Evidence from electrical machinery manufacturing firms" (MATSUURA Toshiyuki, MOTOHASHI Kazuyuki and HAYAKAWA Kazunobu) OECD-METI-RIETI Conference Oct. 06, 2008 "Innovation in the Software Sector" 2007 RIETI Discussion Papers 08-E-008 "IT Management of Chinese Firms: Quantitative Analysis by Using Survey Data" (Xiaoyang FENG and MOTOHASHI Kazuyuki) 08-E-007 "Comparative Analysis of IT Management and Productivity between Japanese and U.S. Firms" (MOTOHASHI Kazuyuki) 07-J-018 "Empirical Analysis of Industrial Structure and Productivity of the Japanese Software Industry" (MINETAKI Kazunori and MOTOHASHI Kazuyuki) 07-J-015 "Impact of Machinery-manufacturing Industry on Globalization and Productivity" (MATSUURA Toshiyuki, MOTOHASHI Kazuyuki and FUJISAWA Mihoko) 2006 RIETI Discussion Papers 06-E-032 "Centralization or Decentralization of Decision Rights? Impact on IT Performance of Firms" (KANAMORI Takahito and MOTOHASHI Kazuyuki) 07-E-009 "Information Technology and Economic Growth: Comparison between Japan and Korea" (KANAMORI Takahito and MOTOHASHI Kazuyuki) Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Major Policy Research Domains I. Maintaining Economic Dynamism under the Adverse Demographic Conditions of Low Fertility and Agin II. Promoting Innovation and Strengthening International Competitiveness III. Formulating Japan's Strategy in Response to Globalization and Deepening Economic Interdependenc IV. 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