Productivity converging? Japan’s 106 industries form two network communities. For six four-year transitions from 2003–2007 through 2008–2012, the services-centered community has beta estimates 0.012, 0, −0.022, −0.009, −0.026 and −0.027; only the last is significant at 5% (p=0.011). The high-tech-centered community has 0.046, 0.056, 0.019, 0.052, 0.022 and 0.012; the first, second and fourth are significant (p=0.024, 0.003, 0.025). Negative beta indicates catch-up. Filled dots mark p<0.05, open dots p≥0.05. Confidence intervals are not reported. Two contrasting paths; these are associations, not causal effects.
Productivity converging? Japan’s 106 industries form two network communities. For six four-year transitions from 2003–2007 through 2008–2012, the services-centered community has beta estimates 0.012, 0, −0.022, −0.009, −0.026 and −0.027; only the last is significant at 5% (p=0.011). The high-tech-centered community has 0.046, 0.056, 0.019, 0.052, 0.022 and 0.012; the first, second and fourth are significant (p=0.024, 0.003, 0.025). Negative beta indicates catch-up. Filled dots mark p<0.05, open dots p≥0.05. Confidence intervals are not reported. Two contrasting paths; these are associations, not causal effects.

Sectoral productivity convergence, input-output structure, and network communities in Japan

Alvaro Dominguez, Felipe Santos, Carlos Mendez
October 2021
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Abstract

We study sectoral productivity convergence through the input-output structure of the economy and its network representation. In particular, we study 106 production sectors in Japan over the 2003-2012 period and identify highly interconnected sectors using community detection algorithms. We next characterize the dynamics of these communities by evaluating the evolution of productivity dispersion using parametric and nonparametric frameworks of sectoral productivity convergence. We find two dominant communities: The central members of community 1 are mostly service-related industries, while the central members of community 2 are mostly high-tech manufacturing industries. The convergence analyses indicate that the two communities have contrasting convergence-divergence patterns. Robust convergence is only found for community 1. In contrast, community 2 appears to be the source of the weak divergence pattern that is observed across all industries in Japan.

Type
Journal article
Publication
Structural Change and Economic Dynamics
productivity convergence input-output networks Japan
Carlos Mendez
Carlos Mendez
Associate Professor of Development Economics

My research interests focus on the integration of development economics, spatial data science, and econometrics to better understand and inform the process of sustainable development across regions.

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