Shuhei Aoki

The Role of the Government in Facilitating TFP Growth during Japan's Rapid Growth Era

Japan experienced high growth of TFP following World War II. This paper studies the sources of this technological growth and documents the role played by different government policies in achieving such growth. We find that in nonagricultural sectors, TFP growth occurred at first through the import of foreign technologies via licensing, and subsequently through the innovation of its own technologies. In agriculture, TFP grew mostly through the development of its own technologies. The Japanese government played a part in the growth of TFP by directing the adoption of foreign technologies, promoting coordination of R&D activities, and setting up channels for the domestic diffusion of available technologies.

Chapter 3. Policy Response to Risks in Foreign Countries

In countries with liberal policy regimes, the level of income redistribution by the government is extremely low, and individuals are therefore exposed to risk. However, the use of financial products (loans, etc.) to share risk compensates for the deficiencies of the policy regime. Countries with policy regimes that emphasize income redistribution policies experience the problem that a high level of benefits reduces the motivation to find work and lowers the labor supply. Sweden has adopted various measures to resolve these issues, including offering day-care services in order to encourage the entry of women into the workforce. The share of family allowances and unemployment benefits, which tend to suppress employment, is greater in France than in Sweden, and it is possible that they actually suppress employment. As indicated by measures including the Gini coefficient and the relative poverty rate, Japan can be considered deficient in terms of income redistribution by the government. However, Japans income redistribution system is not in itself inferior to those of Sweden or France. Japans problem is the high level of administrative discretion involved in the operation of its systems, as can be seen, for example, in the low take-up rate of the social assistance system.