Understanding productivity declines of resource accumulation in the prefectures of Japan

Abstract

This study employs a data envelopment analysis (DEA) framework using long-term panel data of the physical stocks of buildings and infrastructure (roadways and railways), labor force, and gross regional product of 46 Japanese prefectures during the period of 1970–2010. I analyzed the change in the efficiency of production resulting from the labor force and resource accumulation in Japan’s prefectures for the study period to evaluate how this efficiency has changed over the years. The results show that productivity increases in almost all of the prefectures between 1970 and 1990. On the other hand, between 1990 and 2010, productivity declined in approximately 80 % of Japan’s prefectures, including big prefectures, such as Tokyo and Osaka. I find that the productivity in some medium-ranking prefectures in terms of population continued to increase even after 1990 due to the fact that in such prefectures, there was catch-up to the efficient production frontier.