The economic impact of investment, expenditure and wages on GRDP – a case study of 47 prefectures of Japan in 2005

Abstract

The object of the study is the Japan's economy, which has an upward trend after the COVID-19 pandemic. However, there are still several challenges to ensure sustainable growth and economic development. Gross Regional Domestic Product (GRDP) as an economic indicator measures the value of a country's total goods and services. There is controversy and different beliefs in economics as to whether or not a country's GRDP is positively affected. The objective of this research is to find out the most important variable which is responsible for economic progress (GRDP). The main problem which this paper will analyze is that sometimes it is difficult to understand about which factor is more important for economic growth in national and regional basis, gross domestic product, and gross regional domestic product, such as investment, government expenditure, employment, and wages. This paper analyzes investment; government expenditure and wage influence on gross regional domestic product (GRDP) for Japan in 2005 and find out the possible outcomes that are more responsible for the GRDP in the Japanese economy. The results show all three factors have the dominant influences during this time; however, investment is the most powerful indicator among the 47 prefectures. It means that government should give more focused-on investment rather than government expenditure, employment, and wages. In analyzing the data, a comprehensive empirical analysis is conducted using Stata to calculate the statistics on central tendency and the distribution shapes such as minimum and maximum quantiles, standard deviation, sleekness, test for mean difference, and graphical presentation.