Technical Progress in an Input-Output
Framework with Special Reference to
Japan's High-Technology Industries
SHUNTARO SHISHIDO, KIYO HARADA, and YUJI MATSUMURA
Rapid technical progress in Japan's manufacturing industries in recent years, especially after the oil price shock in 1973, has attracted much international concern among economists and policymakers. Although technical progress at the macroeconomic level has suffered from a deterioration since 1973, the manufacturing industries have experienced a remarkable annual increase in productivity, especially the high-technology industries such as robotics, microelectronics, fine chemicals, fine ceramics, and biotechnology. The rise in these new sectors, which have replaced the traditional ones such as steel, petrochemicals, ship building, and heavy electrical appliances, facilitated a rapid structural change during the 1970s that was characterized by a shift from capital-intensive and energy-using sectors to knowledge-intensive and energy-saving sectors.
This chapter analyzes the mechanism behind this structural change in an input- output framework. It also analyzes factor productivity on a detailed sectoral basis with special reference to the high-technology industries.
A new approach is presented in this context. It integrates factor productivity and relative price analysis with the input-output model by using the V-RAS method, a modified RAS method that includes primary factors (the V matrix) in a consistent framework. An empirical test of this approach over the period 1975 to 1980 provided fairly satisfactory results, and the approach was thus judged a reasonable basis for the analysis of a rapid change in industrial structures.
Finally we present in this chapter alternative scenarios for the Japanese economy in the year 2000, with special reference to the high-technology industries, by using alternative technology assumptions. The international impacts of these scenarios are also discussed by combining the I-O model with a multicountry model.
The technology studies and forecasts are based on detailed government I-O tables, comprising 544 × 409 matrices, which have recently been made available in terms of both current and constant prices (see Government of Japan, 1985).