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Industrial Productivity Divergence and Input-Output Network Structures: Evidence from Japan 1973–2012

1
Graduate School of Economics, Nagoya University, Aichi 464-8601, Japan
2
Graduate School of International Development, Nagoya University, Aichi 464-8601, Japan
*
Author to whom correspondence should be addressed.
Economies 2019, 7(2), 52; https://doi.org/10.3390/economies7020052
Received: 9 May 2019 / Revised: 24 May 2019 / Accepted: 25 May 2019 / Published: 31 May 2019
Since the early 1990s, there have been larger and increasing labor productivity differences across industries in Japan. More specifically, a clear pattern of sigma and beta divergence across industries is observed. To shed light on these stylized facts, we first evaluate the input–output structure of Japan through the lens of a community-detection algorithm from network theory. Results from this analysis suggest the existence of two input–output network structures: a densely-connected group of industries (a stationary community), whose members remain in it throughout the period; and a group of industries (a transitional community) whose members do not belong to this first group. Next, we re-evaluate the industrial divergence pattern of Japan in the context of each network structure. Results suggest that divergence is mostly driven by the transitional community. Interestingly, since 2007, a pattern of sigma convergence started to re-appear only in the stationary community. We conclude suggesting that industrial divergence and instability in community membership are not necessarily indicative of low productivity performance. View Full-Text
Keywords: communities; input-output networks; productivity; convergence analysis communities; input-output networks; productivity; convergence analysis
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Domínguez, A.; Mendez, C. Industrial Productivity Divergence and Input-Output Network Structures: Evidence from Japan 1973–2012. Economies 2019, 7, 52.

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