Growth, Productivity, and Policy Instruments During the Lost Decade: A Replication of Beason and Weinstein (1996) for the Period 1992-1998

Abstract

We replicate the analysis of the connection between Japanese sectoral productivity growth and industrial policy performed by Beason and Weinstein (1996) of national accounts data for the period 1992 to 1999. We show that despite some positive raw correlations between growth and industrial policy tools, there is no robust association between growth and industrial policy in the 1990s. This is consistent with the conclusions of Beason and Weinstein for the high-growth period (1960-1973). We also confirm the development of some trends evident in the previous data, such as the skewed distribution of policy instrument application to politically influential industries and the inconsistent application of different instruments to industries. Overall, the data is much more consistent with a theory of Japanese industrial policy as a product of political economy than industrial policy as a response to growth and productivity.