Asia and the World KLEMS Initiative

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1 Asia and the World KLEMS Initiative by Dale W. Jorgenson Samuel W. Morris University Professor Harvard University The Third Asia KLEMS Conference Structural Changes and Productivity Growth in Asian Countries Taipei, Taiwan August 12, 2015

3 Chapter 3, Figure 5: Decomposition of Japan s GDP Growth (Annual Rate, %)

4 Chapter 6, Figure 1: China s Total Factor Productivity by Industry Group (1980 = 100)

5 Chapter 7, Figure 1: India s contributions of factor inputs and TFP growth to GDP growth,

6 Chapter 13, Figure 6: Japan-U.S. TFP Gaps in Manufacturing and Non-Manufacturing,

7 Chapter 13, Figure 9: Japanese and U.S. TFP Levels, Selected Industries,

8 OVERVIEW OF THE WORLD KLEMS INITIATIVE The Purpose of the World KLEMS Initiative Is to Incorporate KLEMS-Type Data Sets into Official Systems of National Accounts. The Growth of Outputs, Inputs, and Productivity at the Industry Level Is Crucial for Understanding the Sources of Economic Growth and the Nature of Structural Change. Level Comparisons among Countries Are Essential for Assessing Competitive Advantage.

9 MILESTONES IN THE WORLD KLEMS INITIATIVE EU KLEMS: Completed June KLEMS Data Sets for 25 or 27 European Union (EU) Members Plus Australia, Canada, Japan, Korea, and the United States. See: LA KLEMS: Established December 2009 at ECLAC/CEPAL, the Economic Commission for Latin America and the Caribbean, Santiago, Chile. See: World KLEMS Initiative: Established First World KLEMS Conference, Harvard University, August See: Asia KLEMS: Established December First Asia KLEMS Conference, Asian Development Bank Institute, Tokyo, Japan, July See: Second World KLEMS Conference: Harvard University, August 9-10, See: _9AM_worldklems2012_timmer_intro.pdf

10 MILESTONES IN THE WORLD KLEMS INITIATIVE (Continued) Russia KLEMS: Laboratory for Research in Inflation and Growth, Higher School of Economics, Moscow, Russia. See: /ruklems. Official Release, July Mexico KLEMS: Instituto Nacionale de Estadistica y Geografia (INEGI), Sistema de Cuentas Nacionales de Mexico: Productividad Total de los Factores, , Aguascalientes, Mexico. See: /prensa/boletines/boletin/comunicados/especiales/2013/agosto/comunica9.pd. Official Release, Instituto Technologico Autonomo de Mexico (ITAM), Mexico City, Mexico, October See: _mexico/presentacion.aspx. Third World KLEMS Conference: Research Institute for Economy, Trade, and Industry (RIETI), Tokyo, Japan, May 19-20, See: /jorgenson/world-klems. India KLEMS: Reserve Bank of India, Mumbai, Official Release, July See: China KLEMS: China Industrial Productivity database, Research Institute for Economy, Trade, and Industry (RIETI), Tokyo, Japan. See: /projects/program/pg-05/008.html. Official Release, April 2015.

11 Taiwan KLEMS: See: =web&cd=4&ved=0cdaqfjadahukewjehm6zutgahxkn4gkhfufdv4&url=http%3a%2f %2Fscholar.harvard.edu%2Ffiles%2Fjorgenson%2Ffiles%2Fyihming_lin_3wklems_taiwan _r1.pptx&ei=q2uqvytxecrvoat7i7bwbq&usg=afqjcngu2dz1vttleuxefr9qe7_9q44by g&bvm=bv ,d.aww. Dataset available on the Asia KLEMS website. See: Current Status of Asia KLEMS China KLEMS: China Industrial Productivity database, Research Institute for Economy, Trade, and Industry (RIETI), Tokyo, Japan. Established at RIETI in 2014 in collaboration with the Institute for Economic Research, Hitotsubashi University. See: Complete documentation available on the RIETI website. India KLEMS: Reserve Bank of India (RBI), Mumbai, See: /PublicationReportDetails.aspx?UrlPage=&ID=785. Complete documentation available on the RBI Website. See: Japan KLEMS: Japan Industrial Productivity database, Research Institute for Economy, Trade, and Industry (RIETI), Tokyo, Japan. Established at RIETI in 2005 in collaboration with Hitotsubashi University. See: /index.html. Complete documentation available on the RIETI website. Korea KLEMS: Korea Industrial Productivity database, Korea Productivity Center (KPC), Seoul, Korea. See: Established at KPC in Complete documentation available on the Asia KLEMS website. See:

12 AGENDA FOR WORLD KLEMS: GROWTH AND STRUCTURAL CHANGE National Accounts. The Objective for the World KLEMS Initiative is to Incorporate Data on Growth and Productivity into the National Accounts. Ten Countries Provide KLEMS Data within National Accounts: Australia, Canada, Denmark, Finland, Italy, Mexico, The Netherlands, Sweden, the United Kingdom, and the United States. Methodology is based on the OECD Productivity Manual, Paris, OECD, 2001: and the OECD Capital Manual, Second Edition, Paris, OECD, 2009: Growth and Productivity Accounts are consistent with the United Nations, System of National Accounts 2008, Chapters 19 and 20: See:

13 THE AGENDA FOR WORLD KLEMS: INTERNATIONAL COMPETITIVENESS Second Priority Is the Analysis of International Competitiveness. The Framework for this is the World Input-Output Study (WIOD), Revised and Extended by OECD and World Trade Organization: KLEMS-Type Data Sets Can Be Linked by Industry-Level Purchasing Power Parities and Trade Data, as Shown by Inklaar and Timmer (2014): The WIOD Data Can Be Used to Implement the Value Added Approach to Trade: Marcel P. Timmer, Bart Los, Robert Stehrer, and Gaaitzen de Vries (2012), Fragmentation, Incomes, and Jobs. An Analysis of European Competitiveness, Working Paper No. 9, Groningen Growth and Development Centre. See: Challenge Remaining Is to Link Data Sets for Capital and Labor Inputs, Using the Methodology of Jorgenson, Nomura, and Samuels: Dale W. Jorgenson, Koji Nomura, and Jon D. Samuels (2015), A Half-Century of Trans-Pacific Competition: Price level indices and productivity gaps for Japanese and U.S. industries, RIETI Discussion Paper Series, 15-E-054, Research Institute for Economy, Trade and Industry, Tokyo, May. See:

14 THE WORLD KLEMS INITIATIVE: THREE REMAINING CHALLENGES KLEMS-Type Data Sets Are Available for Five Asian Countries: China, India, Japan, Korea, and Taiwan. These Have Been Carefully Documented and Maintained. The Results Can Be Downloaded for Research on Productivity and Growth. First Remaining Challenge: Compatibility. The Second Remaining Challenge Is to Incorporate Data on Productivity and Growth into Official Systems of National Accounts in Asia, Following the UN SNA. The Third Remaining Challenge Is to Link Data Sets for Asian Countries by Means of Industry-Level Purchasing Power Parities to Support Research on International Trade and Competitiveness. Example: Global Supply Chains.

15 THE AGENDA FOR THE WORLD KLEMS INITIATIVE: SUMMARY Original Vision: World KLEMS Initiative Involves KLEMS-Type Data Sets for More Than 40 Countries. These Include the Countries that Are Participating in EU KLEMS, LA KLEMS, and Asia KLEMS, the Regional Organizations that Comprise World KLEMS. Linking the Data: Data on Growth and Productivity Can Be Linked through Trade Data and Industry-Level Purchasing Power Parities from World Input-Output Data Base and Industry-Level Purchasing Power Parities for Capital and Labor Inputs. Applications: Growth and Productivity Data Are Used to Analyze the Sources of Economic Growth and Changes in the Structure of an Economy. Linked KLEMS-Type Data Are Used to Analyze International Competitiveness, Including the Evolution of Global Supply Chains.

16 EUROPEAN UNION (EU) KLEMS Two Volumes Reporting Results of EU KLEMS: Marcel P. Timmer, Robert Inklaar, Mary O Mahony, and Bart van Ark, ECONOMIC GROWTH IN EUROPE: A Comparative Industry Perspective, Cambridge, Cambridge University Press, Matilde Mas and Robert Stehrer, eds., INDUSTRIAL PRODUCTIVITY IN EUROPE: Growth and Crisis, Cheltenham, UK, Edward Elgar Publishing, Important Findings: The EU KLEMS Project Identified Weaknesses in the Knowledge Economy Investment in Human Capital, Investment in Information Technology, and Innovation As Main Sources of Economic Growth Slowdown that Preceded the Current Economic and Fiscal Crisis in Europe. Policy Implications: Establishment of a Single Market for Services in Europe Is Critical in Removal of Barriers to the Knowledge Economy and Revival of Economic Growth in Europe as the Crisis Winds Down. Updated Data: See:

19 LATIN AMERICAN (LA) KLEMS Results of Initial Conference Reported in: Mario Cimoli, Andre A. Hofman, and Nanno Mulder (2010), eds., Innovation and Economic Development: The Impact of Information and Communication Technologies in Latin America, Northampton, MA, Edward Elgar. Detailed Report on Mexico KLEMS: INEGI (2013), Sistema de Cuentas Nacionales de Mexico: Productividad Total de los Factores, , Aguascalientes, Mexico, INEGI. Presents a Complete Mexico KLEMS Data Set, Integrated with Mexican National Accounts. A Very Important Empirical Finding: Mexican Total Factor Productivity Has Not Grown since Positive Growth Offset by Negative Growth in Mexican Sovereign Debt Crisis of 1995, U.S. Dot-Com Crash of 2001, and U.S. Financial and Economic Crisis of Other Important Findings Discussed at this Conference.

22 ASIA KLEMS Asia KLEMS Was Preceded by International Comparison of Productivity among Asian Countries (IPAC) Project, Research Institute of Economy Trade and Industry (RIETI), Tokyo, Japan. Results Reported in: Dale W. Jorgenson, Masahiro Kuroda, and Kazuyuki Motohashi (2007), eds., Productivity In Asia: Economic Growth and Competitiveness, Edward Elgar, Northampton, MA. KLEMS-Type Data Sets for Japan and Korea: Japan Industrial Database (JIP); Korea Industrial Data Base (KIP) Updated Data Available on EU KLEMS Website. These Data Sets and Others Discussed at First Asia KLEMS Conference in Tokyo, 2011, and Second Asia KLEMS Conference in Seoul,2013. KLEMS-Type Data Sets Have Completed for India and Taiwan and Under Construction for China and Malaysia. Third World KLEMS Conference, Tokyo, May 19-20, 2014, Research Institute of Economy Trade and Industry. Call for Papers Posted on World KLEMS Website and RIETI Website:

KLEMS MEXICO AND THE WORLD KLEMS INITIATIVE

KLEMS MEXICO AND THE WORLD KLEMS INITIATIVE by Dale W. Jorgenson http://scholar.harvard.edu/jorgenson Presented at the International Seminar: The Accountability of Economic Growth and Total Productivity