International Competitiveness : A Comparison of the Manufacturing Sectors in Korea and Japan

Kyoji Fukao,Kenta Ikeuchi,YoungGak Kim,Hyeog Ug Kwon,Tatsuji Makino 서울대학교 경제연구소 2016 Seoul journal of economics Vol.29 No.1

Using firm-level data covering most firms in the manufacturing sectors of Korea and Japan, we compiled a new dataset of TFP and factor costs by firm size and industry. Employing this dataset, we quantitatively examine changes in the two countries’ relative competitiveness. Following Dekle, and Fukao’s (2011) approach based on production cost functions, we decompose intertemporal changes in the relative competitiveness of Korean firms vis-à-vis Japanese firms into four factors: (1) differences in TFP growth (catching up of Korean firms); (2) changes in relative factor prices; (3) changes in relative intermediate input prices; and (4) changes in real exchange rates. Using our new dataset, we also compare changes in the two countries’ competitiveness by different firm-size groups. We find that during the period of 1994-2010, the real wage rate of Korean workers doubled in most industries. Nevertheless, the competitiveness of Korean firms relative to their Japanese counterparts did not deteriorate. The main factors canceling out the impact of real wage increases were Korea’s higher TFP growth in many industries such as motor vehicles and the sharp decline in Korean intermediate input prices in some industries such as electrical and electronic machinery. We also find that in many industries the competitiveness of Korean small and medium-sized firms vis-à-vis their Japanese counterparts increased by more than that of large firms. Two important developments can be observed which likely contributed to the improved competitiveness of small and medium-sized firms in Korea vis-à-vis their rivals in Japan. First, in Korea, small and medium-sized firms registered higher TFP growth rates than large firms during 1994- 2010. And second, wage gaps across firm-size groups narrowed in Japan, while they widened in Korea.

Deferred Compensation: Evidence from Employer-Employee Matched Data from Japan

Kyoji Fukao,Ryo Kambayashi,Daiji Kawaguchi,Hyeog Ug Kwon,Young Gak Kim,Izumi Yokoyama 한국계량경제학회 2007 한국계량경제학회 학술대회 논문집 Vol.2007 No.2

Wage increases, along with job tenure, are one of the most robust empirical regularities found in labor economics. Several theories explain these empirical regularities, and such theories offer sharp empirical predictions for the relation between productivity-tenure and wage-tenure profiles. The human capital model, with cost and benefit sharing between workers and employers, predicts a steeper productivity-tenure profile than wage-tenure profile. The matching quality model predicts that the two profiles will overlap. Theories that involve the information asymmetry between employers and employees predict a steeper wage-tenure profile than productivity-tenure profile to induce workers’ effort and enhance efficiency. This paper first estimate the establishment-level production function using the total wage bill as a measure of labor input using employer-employee matched data from Japan. After conditioning on the total wage bill, those establishments with more of aged workers produce less. Then we estimate the productivity-tenure profile and the wage-tenure profile by estimating the plant-level production function and the wage equation. These estimations offer a comprehensive test for the relative applicability of the two theories on the wage-tenure profile. Estimation results indicate a steeper wage-tenure profile than productivity-tenure profile and point to the relative importance of the deferred wage payment contract.

An International Comparison of the TFP Levels of Japanese, South Korean, and Chinese Listed Firms

Kyoji Fukao,Tomohiko Inui,Shigesaburo Kabe,Deqiang Liu 서울대학교 경제연구소 2008 Seoul journal of economics Vol.21 No.1

To compare the TFP level of firms in Japan, China, and South Korea, we first estimated the TFP of firms in each country using the method of Good, Nadiri, and Sickles (1997). Then we estimated the relative TFP by industry in the benchmark year using Japanese industries as benchmarks and combined the estimated TFP of firms. When estimating relative TFP by industry for South Korea and China, we applied the industry-level price estimates of the three countries from the ICPA project and converted industry outputs and inputs into the same currency unit (Japanese Yen). The estimation results obtained indicate that the productivity of Japanese firms is still higher than that of their Chinese and South Korean counterparts but that the productivity of South Korean firms is rapidly increasing, with the emergence of some firms that are now overtaking their Japanese rivals in terms of productivity, particularly in the electric machinery sector.

Why Has the Border Effect in the Japanese Machinery Sectors Declined?: The Role of Business Networks in East Asian Machinery Trade

( Kyoji Fukao ),( Toshihiro Okubo ) 세종대학교 경제통합연구소(구 세종대학교 국제경제연구소) 2011 Journal of Economic Integration Vol.26 No.4

This paper analyzes the impact of firm networks on Japan`s national border effect. We estimate gravity equations using data on Japan`s international and interregional trade in four machinery industries (electrical, general, precision and transportation machinery). The machinery sector is the most important manufacturing sector for exports and outward foreign direct investment (FDI) in Japan. By taking into account international as well as interregional firm networks, we find that ownership relations usually enhance exports from parent firms to establishment. Consequently we can explain 15% (7%, 1% and 0.5%) of the decline in Japan`s border effect from 1980 to 1995 in precision (transportation, general electrical) machinery sector by the increase of international networks.

The Internationalization and Performance of Korean and Japanese Firms: An Empirical Analysis Based on Micro-Data

Sanghoon Ahn,Kyoji Fukao,Hyeog Ug Kwon 서울대학교 경제연구소 2004 Seoul journal of economics Vol.17 No.4

Both Korea and Japan are leading exporting countries of advanced manufactured products, and the competitive and efficient manufacturing activities are important pillars of the affluence of the two economies. Yet, comparing the manufacturing sectors of the two countries in the 1990s brings to light a startling contrast in their performance. Applying the same empirical method to the analysis of micro-data for Japanese manufacturing firms for 1994-2001 and Korean manufacturing plants for 1990-8, this paper examines differentials in Japanese and Korean productivity growth. This paper focuses on the role of competition in firm dynamics and on the importance of internationalization as a major determinant of firm performance.

Total Factor Productivity of the Korean Firms and Catching up with the Japanese Firms

Moosup Jung,Keun Lee,Kyoji Fukao 서울대학교 경제연구소 2008 Seoul journal of economics Vol.21 No.1

This paper measured the Total Factor Productivity (TFP) of all listed firms in Korea from 1984 to 2005 and compared this TFP of Korean firms with that of Japanese firms. This study used the chain-linked index number method developed by Good et al. (1999) to find that the average TFP of Korean firms grew about 44.1% between 1984 and 2005, with 2.1% annual growth rates. The catch-up index of Korean firms with Japanese firms is defined at an individual firm level for the first time among existing literature. Through this comparison analysis, the researchers found that there were four patterns of catching up methods practiced by Korean firms in closing in on the Japanese firms. These patterns were over catch-up, just catchup, under catch-up, and reverse catch-up." Furthermore, the researchers found that the number of under catch-up and reverse catch-up industries was more than 40% of the firms subjected in the study. In contrast, only 10.1% of all the Korean listed firms and 8.7% of total sales of all the listed firms surpassed Japanese firms in terms of TFP in 2004. Also, the catch-up performance was quite better in bigger firms, which is indicative of polarization in TFP catch-up performance.