Measuring the contribution of services to Japanese growth (1975–1995)

In Japan, as in other countries of the world, structural change in recent decades has manifested itself by a significant increase in the share of services in total output. Using input–output tables for Japan, and by de-composing the growth rate over the years 1975–1995, we find that the level of final demand contributed more to output change during the 1975–1985 sub-period than during the following decade. Over the 1985–1995 period, an increase in intermediate requirements for inputs from the service industry is witness of the ‘tertiarization' of the Japanese economy. When breaking down the results by separate service industries, we find that technological change explains more than 10 per cent of the output growth for industries such as Commerce, Communication & Broadcasting, and Education & Health during the 1985–1995 sub-period. With the exception of Education & Health, these industries are also those most affected by liberalization and privatization waves in the 1970s and 1980s.