Development Bank of Japan
Research Report
No. 9

Recent Trends in the Japanese Economy:
Information Technology and the Economy

September 2000

Economic and Industrial Research Department
Development Bank of Japan

Contents
Summary ............................................................................................................................. iii
I.

Recovery of the Japanese Economy............................................................................... 1
1. Production: Edging up ................................................................................................................ 1
2. Shipments: Edging up, Inventories: Intentionally being built up ......................................... 3
3. Consumption: Sluggish................................................................................................................ 5
4. Plant and Equipment Investment: Starting to Recover........................................................11
5. Housing Starts: Led by Condominiums, Downtrend for Owned Houses ........................15
6. Public Investment: Leveling off...............................................................................................18
7. Exports and Imports: Increase Led by Asia...........................................................................20
8. Wholesale Prices: Bottoming out, Consumer Prices: Still Weak.........................................24
9. Employment Conditions: Harsh Despite Recovery in Job Offers .....................................27
10. Interest Rates: Stable at Low Levels, Lending: Still Shrinking ............................................31

II. Information Technology and the Economy ................................................................ 33
1. Concepts of IT (Hardware) Investment .................................................................................33
2. Trend of IT Facility (Hardware) Investment .........................................................................34
3. Trend of Software Investment .................................................................................................40
4. IT-related Production and Services .........................................................................................44
5. Trend of Trade in IT-related Goods and Services ................................................................46
6. IT-related Consumption and Widening Generation Gap....................................................50
7. Decline in IT-related Prices ......................................................................................................58

Development Bank of Japan Research Report/ No. 9iRecent Trends in the Japanese Economy:
Information Technology and the Economy

Summary
1.

The Japanese economy is recovering slowly after bottoming out in April 1999. While thegrowth of exports is propping up overall demand, however, domestic demand is still weak,as the effects of fiscal and financial stimulus measures subside and consumption stagnates
due to harsh income and employment conditions. Plant and equipment investment hasbottomed out and is starting to recover, in contrast with the rest of domestic demand.
Personal consumption remains sluggish, and the pace of recovery is slower than inprevious recoveries; this weak consumption is largely attributable to reduced income, which
affects nominal as well as real consumption. Recently, income conditions are showing signsof improvement. The sustainability of the current economic recovery depends largely on the
consumption trend.
Plant and equipment investment has started to rise at the end of 1999, and the pace ofrecovery has picked up. Returns on investment have been improving since the low of 1998,
while machinery orders began to increase year-on-year at the end of 1999 in both the
manufacturing and non-manufacturing sectors. However, the growth in the plant andequipment investment is not evident in the latter half of 2000 due to the growth in the
manufacturing sector which depends on the electrical machinery industry and the end of theextraordinary contribution from the rapid growth of retail outlets in the non-manufacturingsector.
Housing investment is led by condominiums as investment in owned houses declines.
Partly due to housing tax relief measures, the number of housing starts recovered to theannualized rate of around 1.2 million units in the first quarter of 1999. With the deadline forbenefits from the measures extended to June 2001, sales and construction are buoyant for
condominiums, which is not the case for owned houses.
Public investment is leveling off. Largely due to the two economic stimulus packages
launched in 1998, public capital formation as a percentage of GDP exceeded 9% in the third
quarter of 1999. Since then, however, the growth of public investment has slowed and evenreversed in some areas due to difficult budgetary conditions.
Exports and imports continue to increase, mainly to and from Asia. Despite theappreciation of the yen since mid-fiscal 1999, exports have been growing led by producer
goods, thanks to the recovery of the Asian economies from the currency crisis. Exports to
Europe and the U.S. also remain strong. Meanwhile, imports have been increasing rapidly
since early 1999, particularly producer goods, capital goods, and non-durable consumer
goods from Asia.
Industrial production has been growing slowly since the summer of 1999, after
remaining flat for some time, while shipments turned upward at the same time. Inventories
have reached the level of last year, and are now intentionally being built up. Shipments are
Development Bank of Japan Research Report/ No. 9iii

growing rapidly for producer goods and capital goods, in sharp contrast with the slow
growth for consumer goods and construction materials.
Prices remain weak, except for the impact of higher oil prices. Although there are signsof a recovery in job offers, unemployment remains high, affected by the harsh environment
for regular employment. Long-term interest rates stayed low even after BOJ ceased zerointerest-rate policy. The growth of the money supply has dropped to around 2%, reflecting
inactive lending.
2.

The progress of information technology (IT) has had a considerable economic impact
through rapid development of data processing and telecommunication. The impact of IT on
the Japanese economy has grown in various areas including plant and equipment andsoftware investment, production, trade, consumption and prices.
“IT investment” is measured as the total of plant and equipment investment in the IT
supply industries, or as the investment in IT goods by all industries except the IT supply
industries. The former and the latter amounted ¥6 trillion, respectively (about 8% of plantand equipment investment) in 1995. Even in the latter half of the 1990s, when plant andequipment investment stagnated, IT investment rose steadily. Also, the share of software
expenditure in total data-processing costs has continued to increase. In particular, software
investment amounted to almost ¥3 trillion in 1995.
IT-related production is robust in both goods and services. As regards IT-related goods,
the production of manufactured goods such as computers has increased slowly, but that ofsemiconductors and other IT-related parts has risen substantially. The steady growth of ITrelated services owes much to the rapid progress of mobile communications. As regards thetrade in IT goods, there has been a substantial increase in imports. In particular, Asia has a
trade surplus with Japan in office equipment.
IT-related consumption is increasing steadily while overall consumption stagnates. The
gap in IT-related consumption can be attributed to the age of householders rather than totheir income. Since 1995 in particular, the IT consumption ratio has risen sharply for thoseunder 29 years old, but shown no substantial change for 60 year-olds and over. Although ITrelated prices have contributed substantially to the decline in wholesale prices, their impact
on consumer prices has been much smaller.

iv

Development Bank of Japan Research Report/ No. 9

I. Recovery of the Japanese Economy
1. Production: Edging up
The Japanese economy is recovering slowly after bottoming out in April 1999. While the growthof exports is propping up overall demand, however, domestic demand is still weak, as the effectsof fiscal and financial stimulus measures subside and consumption stagnates due to harsh income
and employment conditions. Plant and equipment investment has bottomed out and is starting torecover, in contrast with the rest of domestic demand.
After recording the first year-on-year increase in seven periods in the second quarter of 1999
(up 0.6%), real GDP (Figure 1-1) has narrowly kept growing; up 0.9% in the third quarter, down
0.3% in the fourth quarter, and up 0.7% in the first quarter of 2000. For fiscal 1999 as a whole, it
increased 0.5%, recording the first positive growth in three years. Excluding the growth of 0.6%
carried over from the previous year, however, the growth within fiscal 1999 was -0.1%, indicatinga negative growth for the third consecutive year. Quarter by quarter change also points tonegative growth for the third and fourth quarters of 1999. Although there was rapid growth in
the first quarter of 2000 of 2.5% from the previous quarter thanks to the leap-year effect, thelevel was still lower than that of the second quarter of 1999 (on a seasonally adjusted basis). Thus,
the pace of recovery is slow.
Figure 1-1. Trends in Real GDP(Year-on-year change by component)
(%)
9
91/2

97/3

93/10

99/4

7
5
3
1
-1
-3
-5
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)
Plant and equipment investment
Inventory investment
Imports (reversed sign)

Source:Housing investment
Public investment

Consumption
Exports

ＧＤＰ

Economic Planning Agency, “Annual Report on National Accounts,” 1990 as base year.

Development Bank of Japan Research Report/ No.9

1

Among expenditures, private consumption remains sluggish. Its year-on-year growth fell to
0.1% in the fourth quarter of 1999 after peaking at 1.9% in the second quarter of the same year.
Despite the leap-year effect, the growth in the first quarter of 2000 was only 1.1%, indicating the
weakness of recovery. As regards workers’ households, the positive impacts from tax reduction
and the rise in consumption propensity have been more than offset by the deterioration ofincome mainly due to the reduction in bonus.
Plant and equipment investment of private corporations increased for the first time in eight
periods in the fourth quarter of 1999, up 1.7% from the previous year. It also rose 4.3% in thefirst quarter of 2000, reflecting rapid improvement in the non-manufacturing sector. Even in the
manufacturing sector, where investment is still lower than the previous year, conditions havebeen improving steadily. In light of the improvement in return on investment return and thetrend of machinery orders, which serve as leading indicators, plant and equipment investment is
expected to continue to recover from its slump.
Housing investment has been increasing on the previous year since the second quarter of
1999, mainly due to the continuation of low interest rates and the effect of housing tax relief
measures. Housing starts exceeded 1.2 million units for fiscal 1999 as a whole. However, housing
starts for owned houses, which led the recent recovery, are now falling. Despite the support fromdwellings for sale including condominiums, housing starts are showing signs of leveling off.
Public demand including government final consumption and public fixed capital formation
has not reached the previous year’s level since the fourth quarter of 1999 as the effect of the two
economic stimulus packages in fiscal 1998 subsided. Looking ahead, public demand is notexpected to increase substantially despite the economic renewal measures (totaling ¥18 trillion)
agreed on in November 1999, as local governments continue to face financial difficulties.
Figure 1-2. Trend of Production Indicators (Seasonally adjusted)
120
91/2

93/10

99/4

97/3
Industrial production index(1995=100, weight 22.4%)

110

100

90

Tertiary industry activity index(1995=100, weight 59.5%)

Construction activity index(1995=100, weight 8.1%)

80
90

Source:

2

91

92

93

94

95

96

97

Ministry of International Trade and Industry, “Industrial Statistics Monthly.”

Development Bank of Japan Research Report/ No. 9

98

99
00
(CY quarterly basis)

Exports of goods and services rose in the third quarter of 1999, led by Asia and supportedby the global economic boom, recording a double-digit increase on the previous year in the firstquarter of 2000. Imports are also increasing, mainly from Asia, recording a double-digit increaseon the previous year for the second consecutive period. The first quarter of 2000 saw the first
positive contribution in six periods from net exports.
Figure 1-2 shows the trend of major production indicators including industrial production
index, construction activity index and tertiary industry activity index.
The industrial production index started to rise in the third quarter of 1999, recording asubstantial gain of 2.7% on the previous year led by transport equipment and electrical machinery.
Electrical machinery has since led the mild rise in industrial production, generating ancillarydemand and supported by growing exports. Industrial production recorded a fourth consecutive
increase in the second quarter of 2000.
The construction activity index rose temporarily from the fourth quarter of 1998 as public
works projects took off. However, it then leveled off and stayed low. The tertiary industry
activity index remains firm as a whole, thanks to the contribution fromtransport/communications supported by mobile communications and freight transport. In
addition, activity is picking up in business services, a component of the service sector which has
the heaviest weight in the index.
2.

Shipments: Edging up, Inventories: Intentionally being built up
Figure 1-3 shows the inventory cycle in terms of the growth of shipments and inventories.
For the whole industrial sector, the year-on-year decline in inventories began to slow down in thesecond quarter of 1999 and shipments increased for the first time in two years in the third quarterof 1999, indicating the end of inventory adjustment. The year-on-year increase in shipments has
since accelerated, while inventories started to increase on the previous period in the first quarterof 2000. So far, inventories have been increasing for products with rising demand such as
semiconductor-related items, and such developments suggest that inventories are now being
intentionally built up in the inventory cycle.
The recovery in shipments differs among goods, while inventories are generally bottoming
out. Shipments of capital goods (excluding transport equipment) have bottomed out and are now
moving upward, boosted by the recovery in plant and equipment investment (Figure 1-4).
Shipments have come to a halt for construction materials as public investment has leveled off(Figure 1-5). Consumer goods have risen slowly from the previous year, reflecting the weak
recovery in personal consumption (Figure 1-6). But the shipments increased for the domestic
market in the first quarter of 2000 due to the leap-year effect, following signs of improvementthat shipments of durable good are showing in the second quarter. Shipments of producer goods
led final demand goods in recovery, recording a double-digit increase on the previous year
(Figure 1-7). Meanwhile, inventories outran last year’s level in the second quarter of 2000 for
producer goods.

Development Bank of Japan Research Report/ No.93

1000/4-65

00/1-3

99/7-90Concept
Change in shipments on previous
year (%)

97/1-3
99/10-12

99/4-6
99/1-3
98/1-3

98/10-12

98/7-9

-10
-10

-5

98/4-6

Change in shipments on previous year (%)

15

5
99/10-12

99/7-998/1-3-5
99/4-693/10-12

-10
-15

-20

98/4-6

98/10-12

99/1-3-15

Change in inventories on previous year (%)

Figure 1-5. Inventory Cycle ofConstruction Materials

97/1-300/4-600/1-30-10

98/7-9

-5

0

5

10

15

5
00/4-6000/1-3
99/7-999/1-3-5

99/10-12

98/10-12-10

98/7-9-10-5

5

99/10-1200/1-3

99/1-3000/4-6

98/10-12
99/4-6
98/7-9-5

98/1-3

98/4-693/10-12

-10
-10

-5

0

5

10

Change in inventories on previous year (%)

15
00/4-6
99/10-12

10

00/1-3

99/7-95
99/4-60

99/1-3-5
98/10-12

-10

-15

5

10

Change in inventories on previous year (%)

40

Figure 1-7. Inventory Cycle ofProducer’s Goods

97/1-3
99/7-998/1-3

98/4-6-15

Change in shipments on previous year(%)

Change in shipments on previous year(%)

Figure 1-6. Inventory Cycle of Consumer
Goods

93/10-12

99/4-6

Change in inventories on previous year (%)

10

Adjustment phase

0510Change in inventories on previous year (%)

Figure 1-4. Inventory Cycle of Capital
Goods (Excluding transport equipment)
10

45-degree line
Unintended
accumulation
phase

Buildupphase

Recoveryphase

93/10-12-5

Change in shipments on previous year (%)

Change in shipments on previous year(%)

Figure 1-3. Inventory Cycle(Mining and manufacturing sector)

Development Bank of Japan Research Report/ No. 9

-10

-5

0

93/10-12

98/1-3

98/7-998/4-6
5

10

Change in inventories on previous year (%)

3. Consumption: Sluggish
In the current recession, personal consumption has remained sluggish for a long time and notshown strong recovery in the three quarters following the economic bottom (2Q/99). Figure 1-8
confirms this by comparing the current recession with previous recessions: (i) post-oil crisis
recession, (ii) worldwide recession, (iii) high yen recession and (iv) Heisei recession. The data
indicate the levels of real consumption on a quarterly basis, indexed on the peak of each businesscycle (=100).
Figure 1-8. Real Personal Consumption at Past and Current Business Cycle
125
120
115
（peak of the cycle = 100, trough = ○）
110
105
100
95
(passage of time in quarters)
90
0

1

2

3

4

5

6

7

8

Post-oil crisis recession (4Q/73-1Q/75-4Q/75)
High yen recession (2Q/85-4Q/86-3Q/87)
Current recession (1Q/97-2Q/99-1Q/00)

Source:

9

10

11

12

13

14

15

Worldwide recession (1Q/80-1Q/83-4Q/83)
Heisei recession (1Q/91-4Q/93-3Q/94)

Economic Planning Agency, “Annual Report on National Accounts.”

With the exception of the post-oil crisis recession, the level of real consumption in previous
recessions ((ii), (iii) and (iv)) always exceeded 100. In the current recession, real consumption has
remained low following the large drop in the second quarter of 1997 due to the consumption tax
hike. The recovery has been weak, even after the economic trough. The consumption was still
below that of the first quarter of 1997 (=100) in the first quarter of 2000, in spite of the leap year
effect, which accounts for 0.8% of the 1.8% seasonally adjusted increase from the previous
quarter. The current weakness of consumption is evident, because, even in the post-oil crisis
recession ((i)), real consumption regained the pre-recession peak level at the trough (1Q/75),
then followed a mild recovery.
Figure 1-9 analyzes the factors behind sluggish consumption from the growth in realconsumer spending in workers’ households according to the Family Income and Expenditure
Survey. Here, the factors influencing consumption are decomposed into income (pre-tax income
Development Bank of Japan Research Report/ No.95

including regular wages and salaries, overtime pay and bonus), tax and charges (income tax,
inhabitant tax, social insurance premium, etc.) and consumption propensity (ratio ofconsumption to disposable income, which is equivalent to income minus tax and charges).
From the latter half of 1999 to early 2000, consumption was supported by the reduction in
tax and charges due to the continuation of tax relief measures (contribution to year-on-yearchange from 3Q/99 to 1Q/00 amounting to 0.2%, 1.7% and 1.4% respectively) and the rise in
consumption propensity (2.4%, 0.1% and 1.0% respectively). However, it was depressed by thefall in income due to the reduction of bonus and the reaction to last year’s local sales promotion
voucher handouts (contribution amounting to –3.3%, -5.2% and –2.9% respectively). Even in thesecond quarter of 2000, consumption only regained the previous year’s level, because theimproved consumption propensity was cancelled out by the decline in income.
Figure 1-9. Factoral Resolution of Real Consumption Expenditure of Workers’
Households (Change on previous year)
6%
4%
2%
0%
-2%
-4%
-6%
-8%
95

96

Income factor

Notes:

Sources:

697

Consumption propensity factor

98

99

Tax and charges factor

00(CY quarterly basis)
Real consumption

1. C／P = α×(Y−T)／P is resolved according to the following formula:
Δ(C／P)＝α×Δ(Y／P)−α×Δ(T／P)＋Δα×(Y−T)／P＋residual(income factor) (tax and charges factor) (consumption propensity factor)
C: consumption expenditure, Y: income, T: tax and charges,α: average consumption propensity, P:
consumer price2. Contribution of local sales promotion vouchers to income amounts to +1.0% for 1Q/99 and +0.1%
for 2Q/99 (DBJ estimate).
Management and Coordination Agency, “Family Income and Expenditure Survey” and “Consumer Price
Index.”Development Bank of Japan Research Report/ No. 9

The consumption has been sluggish even in nominal base. Figure 1-10 compares realconsumption with nominal consumption. [see (Note) 2. in Figure 1-10 for the method of estimation].
The real consumption fell below the 1996 level as early as in the fourth quarter of 1997,
when financial instability became apparent, while the nominal consumption has experienced
substantial drops since the fourth quarter of 1999, almost falling to the level of nine years ago in
the first quarter of 2000. The data suggest that it is increasingly difficult to compensate for the
decline in prices by selling more.
Figure 1-10. Trend of Consumption Level Index for All Households(Seasonally adjusted)110(1Q/91=100, seasonally adjusted by Census X-11)

108② Nominal consumption (DBJ estimate)

106
104

① Real consumption (Family
Income and Expenditure Survey)

102
100
98

① Monthly consumption expenditure per household is adjusted to the value for a 4-member householdin 30.4 days (365 days/12), indexed on 1995 as a base year, converted into real value by using
consumer price index as deflator, and then recalculated on the basis of 1Q/91=100.
② Original real series corresponding to (i) is converted into original nominal series using consumer price index.
Seasonally adjusted series is estimated by applying the relationship between the seasonally adjusted nominal
and real values for private final consumption expenditure in the SNA statistics, and then recalculated on thebasis of 1Q/91=100.

96
94
92
91
Sources:

92

93

94

95

96

97

98

99
00
(CY quarterly basis)

Economic Planning Agency, “Annual Report on National Accounts;” Management and Coordination
Agency, “Family Income and Expenditure Survey,” and “Consumer Price Index.”

Development Bank of Japan Research Report/ No.9

7

The sales statistics by vendors paint a similar picture. Figure 1-11 shows the trend of theretail sales index (seasonally adjusted, 1995=100) separately for durable goods (household
machinery and appliances, automobiles) and for semi- and non-durable goods (textiles, clothes,personal goods, foods and beverages). The index for durable goods, which account for just under
20% of total retail sales, remained almost static throughout 1999, but the composite index has
not bottomed out. In particular, the index for semi- and non-durable goods, which account for
40% of total retail sales, has dropped significantly since the fourth quarter of 1999.
The hardship is partially attributable to unsuccessful sales campaigns carried out since theautumn of 19991. In addition, efforts by existing stores to compete with the prices of emerging
discount stores have been largely unsuccessful in attracting consumers.
Figure 1-11. Trend of Retail Sales Index(Seasonally adjusted)125(1Q/92=100, seasonally adjusted by Census X-12-ARIMA)

120
115

of which: household machines and appliances, automobiles

110

Retail industry total

105
100
95
90
of which: textiles, clothing, personal items, foods and beverages

85
80
75
92

Notes:

Source:

1

8

93

94

95

96

97

98

99
00
(CY quarterly basis)

Retail sales index by industry (seasonally adjusted) is estimated using the weight of each industry in total
sales (1995 as base year) and then recalculated on the basis of 1Q/92=100. The weights of industries
appearing here are as follows;
39.4%• Textiles, clothing, personal items, foods and beverages
17.0%• Household machines and appliances, automobiles
Ministry of International Trade and Industry, “Report on the Current Survey of Commerce.”

Many stores have conducted such campaigns to fend off the reaction to the consumption tax payback campaigns mostly
conducted by supermarkets in the autumn of 1998.
Development Bank of Japan Research Report/ No. 9

Reviewing the rise and fall of major players in the retail industry throughout the 1990s,
Figure 1-12 plots the number of stores and the value of sales by business category according to
Census of Commerce the following three periods: (i) 1991-94, (ii) 1994-97 and (iii) 1997-99. In
the 1990s, strong new players emerged in the retail industry such as convenience stores and new
types of supermarkets specialized in clothing, foods or living, while traditional department storesand general supermarkets struggled. However, all categories of stores faced difficult conditions
due to sluggish consumption from 1997 to 1999. The number of outlets of department storesand general supermarkets decreased as closures outnumbered new openings (annual drop of
9.9% for the former and 6.5% for the latter), and sales started to fall (annual drop of 5.4% and6.2% respectively). Convenience stores and specialized supermarkets also saw their power wane,with both the number of outlets and the value of sales declining.
Figure 1-12. Growth of Outlets and Sales in the 1990s by Type of Stores(Annual rate)
10

Convenience stores①

6③
Sales growth (%)

General supermarkets
2

-10

-8

-6

-4

0
-2
①

②

②
②

0
-2

Specialized supermarkets

③
①

4

② ①

②

①

8

Outlet growth (%)
2

4

6

8

10

Department stores-4
Specialized small stores
③
③

③

-6
-8

Note:
Source:Average annual growth rate for the periods c 1991-94, d 1994-97 and e 1997-99. Data for 1999 areprovisional.
Ministry of International Trade and Industry, “Census of Commerce.”

Development Bank of Japan Research Report/ No.9

9

Against this backdrop, new car registrations (seasonally adjusted, Figure 1-13), among
durable goods ranged from 1.0 to 1.1 million units per quarter following the consumption tax
hike in 1997, and have shown signs of recovery in recent months. After posting another record
low in the fourth quarter of 1999 at 999,000 vehicles as the sales boom for new types of light
automobile receded, new car registrations in the second quarter of 2000 (11.03 million vehicles)
exceeded the previous quarter, which was inflated due to the leap-year effect. However, small car
registrations in June 2000 increased for the first time in 17 months since January 1999. Further
recovery depends on the effect of major model changes due this summer and thereafter.
Figure 1-13. Trend of New Car Registrations(Seasonally adjusted by Census X-11 method)(10,000 vehicles)
140
90/3Q
130

97/1Q

120
00/2Q

110

100

93/4Q

98/1Q

99/4Q

90
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)
Source:10

Economic Planning Agency, “Indexes of Business Conditions.”

Development Bank of Japan Research Report/ No. 9

The income condition is the most important factor in forecasting future consumption trends.
Total wages and salaries per person (Figure 1-14) rose in the first quarter of 2000 for the firsttime in nine quarters. Overtime pay has been increasing since the third quarter of 1999, reflecting
an increase in overtime hours due to production growth. Bonus is expected to bottom out thissummer in the private sector, after experiencing successive year-on-year declines up to the winterof 1999. Regular wages and salaries are not expected to rise substantially for some time, as thespring labor offensive of 2000 is likely to result in a record-low wage rise of about 2%.
Nevertheless, overall income conditions have seen their worst period. The sustainability of theeconomic recovery depends on whether consumption picks up as income conditions improve
gradually.
Figure 1-14. Trends in Wage and Salary per Person(Trend of year-on-year change by component)(%)
4−Firms employing 5 or more workers−

2

0

-2

-4
95

96

Regular wage and salary

Source:97

Overtime pay

98

Bonus and special earnings

99

00(CY quarterly basis)
Total wage and salary

Ministry of Labor, “Monthly Labor Survey.”

4. Plant and Equipment Investment: Starting to Recover
Plant and equipment investment on a real GDP basis rose 1.7% on the previous year in the
fourth quarter of 1999, the first increase in eight periods, and accelerated 3.7% in the first quarterof 2000.
Figure 1-15 shows the year-on-year growth by industry according to the Statistical Survey ofIncorporated Enterprises. Although there have been improvements in both the manufacturing
and non-manufacturing sectors, plant and equipment investment in the manufacturing sector has
only bottomed out and was still down 6.1% from the previous year in the first quarter of 2000,
while the non-manufacturing sector led the recovery with a strong 7.7% increase.
Development Bank of Japan Research Report/ No.9

11

Figure 1-15. Plant and Equipment Investment and Return on Investment(corporations of all sizes)
Manufacturing
(%)
30

91/2

93/10

97/3

(%)
15

99/4

20
10
10
0

5

-10
0
-20
-30

-5
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)Non-manufacturing
(%)
30

91/2

97/3

93/10

(%)
10.0

99/4

20

7.5

10

5.0

0

2.5

-10

0.0

-20

-2.5

-30

-5.0
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)
Change on previous year in plant and equipment investment
Return on investment (right scale)Notes:

Sources:12

1. Return on investment = operating profit-tangible asset – average lending rate of banks (new loans, total),
where operating profit-tangible asset ratio = operating profit/(tangible fixed assets + inventories).
2. No adjustments are made for changes in the accounting rule on business tax (ministerial order revisedin Dec. 1998).
Ministry of Finance, “Quarterly Report of Statistical Survey of Incorporated Enterprises,” etc.

Development Bank of Japan Research Report/ No. 9

The increase in the non-manufacturing sector is largely due to the service industry, followed
by wholesale/retail. By corporate size, small companies2 made the greatest contribution to theincrease. However, the sustainability of the increased investment in the non-manufacturing sector
require careful attention for two reasons: First, the service industry mainly is led by hotels andrecreational facilities, but such development of those two industries is not quite convincing
because their profit levels remain relatively low. Second, the wholesale/retail industry is mainly
led by large-scale investment in redevelopment projects and the accelerated establishment of newoutlets before the enforcement of the Law on the Location of Large-scale Retail Stores. Plant
and equipment investment in the manufacturing sector is led by electric machinery with a doubledigit increase on the previous year. However, substantial declines have continued in other majorindustries such as transport equipment and chemicals.
Return on investment (operating profit-tangible asset ratio – average interest rate on newloans: see Note of Figure 1-15), shown in the same figure, has been improving since the second
quarter of 1998 in the non-manufacturing sector and since the fourth quarter of 1998 in the
manufacturing sector, largely exceeding the empirical threshold for positive plant and equipment
investment (5% for manufacturing and 2.5% for non-manufacturing)3. Although the recovery ofplant and equipment investment in the manufacturing sector lags behind the improvement inreturn on investment, favorable conditions are now being created for investment recovery.
Machinery orders (Figure 1-16), which are considered to lead plant and equipment
investment by two to three quarters, rose from the previous year in the fourth quarter of 1999
(first increase in nine periods for manufacturing and in 11 periods for non-manufacturing). The
recovery trend has been confirmed by the four consecutive increases since then. Investment in
the manufacturing sector is dominated by electrical machinery, but is also bottoming out in otherindustries. In the non-manufacturing sector, investment has risen in many of the major industries
including telecommunications, wholesale/retail and finance/insurance.
Although the current increase in plant and equipment investment may be partly attributable
to temporary factors, investment is expected to continue to recover for some time.

2 The Quarterly Report of Statistical Survey of Incorporated Enterprises covers the corporations capitalized with ¥10 million or

over. Of those companies, large-sized companies are defined as those capitalized with ¥1 billion or over, medium-sizedcompanies with ¥100 million or over and less than ¥1 billion, and small-sized companies with ¥10 million or over and less than¥100 million.
3 For data since the first quarter of 1999, the inflating effect of the change in accounting rules applicable to corporate tax should be
discounted.
Development Bank of Japan Research Report/ No.9

13

Figure 1-16. Trends in Orders Received for Machinery(Trend of year-on-year change by industry)

Manufacturing

(%)
35
25
15
5
-5
-15
-25
-35
90

91

92

93

Automobiles
Chemicals

94

95

Electrical machinery
Others

96

97

98

99

00

(CY quarterly basis)
Iron & steel

General machinery
ManufacturingNon-manufacturing

(%)
35
25
15
5
-5
-15
-25
-35
90

91

92

93

94

Real estate
Wholesale/retail
Construction

Source:14

95

96

Finance/insurance
Communications
OthersEconomic Planning Agency, “Orders Received for Machinery.”

Development Bank of Japan Research Report/ No. 9

97

98

99

00

(CY quarterly basis)

5. Housing Starts: Led by Condominiums, Downtrend for Owned Houses
Housing starts fell continuously from the first quarter of 1997, falling below 1.2 million in fiscal
1998 for the first time in 15 years (1.18 million units), but then rose on the previous period in thefirst quarter of 1999 largely due to the effect of housing tax relief measures and low interest rates.
As a result, housing starts recovered slightly in fiscal 1999 to 1.23 million units (Figure 1-17). The
average indicates and records over 1.2 million units in the first and the second quarter of 2000, as
the increase in condominiums is more than offset by the decline in owned houses.
Figure 1-17. Trend of Housing Starts(Seasonally adjusted annual rate)(1,000 units)
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
90

91

92

93

Owned houses
Notes:
Source:94

95

Houses for rent

96

97Company houses

98

99
00
(CY quarterly basis)
Condominiums

Census X11 is used for seasonal adjustment.
Ministry of Construction, “Report on Statistical Survey on Construction Starts.”

After recording a double-digit increase on the previous year in the first half of fiscal 1999,
the construction of owned houses leveled off in the latter half of the year, as the standard lending
rate of the Housing Loan Corporation left the floor of 2.0% in December 1998 (Figure 1-18).
Other factors include the expectation that interest rates will rise, as well as the initial inhabitation
deadline of December 2000 to benefit from housing tax relief. Following the substantial increaseof 26.9% on the previous year in January 2000, when housing starts showed a huge increase, theconstruction of owned houses has declined for five consecutive months, thus confirming thedowntrend.

Development Bank of Japan Research Report/ No.9

15

Figure 1-18. Trend of Housing Loan Interest Rates(Unit: %)98/12 99/1

2

3

4

5

6

7

8

9

Housing Loan
Corporation

2.00 2.20

City bankvariable rate

2.50

City bank fixed
rate (5 years)

2.65 3.15 3.10 2.90 2.55 2.40 2.60 2.70 2.85 2.70

City bank fixed
rate (10 years)

3.20 3.80

2.40

10

2.50 2.60

11

12

2.80

00/1

2

3

4

5

6

7

2.75 2.80 2.85 2.80 2.75

2.375

3.70 3.30 3.20 3.55

2.65 2.60

3.75 3.60

3.50

2.75
3.40 3.55

2.65 2.75
3.50

3.45

Notes: 1. Interest rate of the Housing Loan Corporation represents the standard rate (applicable to “certain
housing of good quality” for the initial 10 years).
2. The rate represents that at the end of the month.

Factors supporting immediate housing purchases may have weakened as the standard
lending rate of the Housing Loan Corporation has remained stable at around 2.8% since thebeginning of the year and the deadline for tax relief measures was extended to June 2001. The
number of applications for the Corporation’s housing purchase loans, a leading indicator of theconstruction of owned houses, declined substantially from the previous year for the third andfourth invitations in 1999 (Figure 1-19). The number of applications rose by only 4.3% for the
first invitation in 2000. Thus, housing starts are expected to remain weak for owned houses.
However, there may be a surge in demand in the latter half of fiscal 2000 as the deadline for tax
relief approaches.
Figure 1-19. Housing Loan Applications for Owned Houses
Application
deadline

Application period(days)

Number ofapplications(1,000)Change onprevious year(%)

Standard rate(%)

1

May 30

10

55

-47.7

3.10

2

Sep. 12

15

52

-60.3

3.10

3

Nov. 28

18

47

-21.9

3.00

4

Mar. 6

19

57

-33.2

3.00

1

Jun. 5

23

62

13.3

2.75

2

Sep. 30

31

67

28.8

2.55

3

Dec. 25

37

70

49.9

2.00

4

Mar. 26

48

101

75.1

2.20

Invitation
FY1997

FY1998FY1999FY2000Source:16

1Jun. 18

36

62

0.0

2.40

2

Oct. 29

67

88

32.6

2.60

3

Jan. 14

61

37

-47.3

2.80

4

Mar. 10

33

38

-62.5

2.75

1

Jun. 30

72

65

4.3

2.75

Housing Loan Corporation, “Monthly Report on Housing Loans.”

Development Bank of Japan Research Report/ No. 9

In contrast, sales of condominiums are buoyant, largely offsetting the sluggishness forowned houses. Throughout 1999, the contract rate of condominiums in the Tokyo metropolitan
area remained at almost 80%, leading to a fall in completed inventories (Figure 1-20).
Condominiums are expected to support housing investment for some time, because their longer
construction periods (nine months to one year) would hasten any last-minute demand.
The construction of houses for rent continues to slide due to a small glut on the supply side.
Figure 1-20. Contract Rate and Completed Inventories of Condominiums(Tokyo metropolitan area)(Units)
14,000100%
95%

12,00090%
10,000

85%
80%

8,000

75%
6,000

70%
65%

4,000

60%
2,000

55%

0

50%
90

91

92

93

94

95

96

Inventories (right scale)Notes:
Source:97
Contract rate

98

99
00
(CY quarterly basis)

Contract rate represents the quarterly average ratio of units sold in the months to units marketed in themonth. Completed inventories are measured at the end of each quarter.
Real Estate Research Institute, “Trend of Condominium Market in Tokyo Metropolitan Area.”Development Bank of Japan Research Report/ No.9

17

6. Public Investment: Leveling off
Public investment (public capital formation, Figure 1-21) started to rise in the fourth quarter of1998 thanks to the economic stimulus package of April 1998 (totaling over ¥16 trillion) and theemergency economic measures of November 1998 (¥23.9 trillion). It increased to 9.1% of GDP
in the second quarter of 1999, but since the third quarter of 1999, it has declined for threeconsecutive periods to 7.3% in the first quarter of 2000.
Figure 1-21. Trend of Public Investment(%)(¥ billion)
50,00010.5

45,000Nov. 1998 Emergency economic
measures (¥23.9 trillion)

Apr. 1993 Integrated economic
measures (about ¥13.2 trillion)

40,000Nov. 1999 Economic renewal
package (¥18 trillion)

Sep. 1995 Temporary economic
measures (¥14.22 trillion)

Sep. 1993 Emergency economic
measures (about ¥6 trillion)

10.0
9.5
9.0

35,0008.5

30,000

8.0
Apr. 1995 Emergency economic measures against the
yen appreciation (about ¥4.62 trillion)

25,000

7.5

Feb. 1994 Economic stimulus
package (about ¥15.25 trillion)

20,000

7.0
Apr. 1998 Economic stimulus
package (over ¥16 trillion)

Aug. 1992 Economic stimulus
package (about ¥10.7 trillion)

15,000
91

92

93

94

95

Public fixed capital formation
Note:
Source:

18

96

97

6.0
99
2000
(CY quarterly basis)

As % of GDP (right scale)

Data represent seasonally adjusted annual rate.
Economic Planning Agency, “Annual Report on National Accounts.”

Development Bank of Japan Research Report/ No. 9

98

6.5

The contract value of public works, the leading indicator, recorded a substantial increase of
11.7% for fiscal 1998 largely thanks to the large increase of 52.7% in the first quarter of 1999 dueto the economic stimulus measures. However, the contract value began to fall again in the second
quarter of 1999, particularly in regions with financial difficulties, and declined 9.1% in fiscal 1999
(Figure 1-22). The downtrend still continues in fiscal 2000.
Although the economic renewal package (totaling about ¥18 trillion) should have someeffect, public investment will not increase significantly in fiscal 2000 due to harsh budgetaryconditions.
Figure 1-22. Trend of Contract Value for Public Works (Change on previous year)
(%)
60
50

Central

Local

40

Others

Total

30
20
10
0
-10
-20
91

Source:

92

93

94

95

96

97

98

99
(FY)

4-6 7-91998

10- 1-3 4-6
12 1999

7-9

10- 1-3 4-6
12 2000

Association of Surety Companies, “Table of Surety Business.”

Development Bank of Japan Research Report/ No.9

19

7. Exports and Imports: Increase Led by Asia
Figure 1-23 shows the trend of the real effective exchange rate of major currencies. The yen has
been appreciated since September 1998, with a substantial appreciation since September 1999,
and remains strong at present.
Figure 1-23. Trend of Real Effective Exchange Rate (1990=100)
140
Japan

U.S.

Germany130

Yen appreciation

120
110
100
90
80
93
Note:
Source:

94

95

96

97

98

99

2000
(CY quarterly basis)

Real effective exchange rate is a trade-weighted currency index after adjustment for inflation, covering the
trading partners including 21 developed and 23 developing countries.
JP Morgan, “World Financial Market.”

The volume of exports (Figure 1-24) slowed substantially from the latter half of 1997 due tothe Asian currency crisis, recording consecutive declines on the previous year from the second
quarter of 1998, then rose on the previous year in the third quarter of 1999, backed by therecovery of the Asian economies. A double-digit increase has continued for two consecutive
quarters since the first quarter of 2000.
By destination, exports to Asia fell on the previous year in the fourth quarter of 1997 due to thecurrency crisis in ASEAN countries and South Korea, followed by a substantial drop of 17.7% in thethird quarter of 1998. However, they then recovered in the second quarter of 1999 (up 5.7% from theprevious year) and have led the overall increase in exports until now. Backed by robust domestic
demand, exports to the U.S. have increased considerably since the fourth quarter of 1996 and remainstrong. Exports to Europe have regained strength since the third quarter of 1999, after a substantial
slowdown in the first half of the year due to the depreciation of the euro.
Figure 1-24 shows the growth of shipments for export by type of goods according to theIndustrial Production Statistics. In 1998, the growth of durable consumer goods exports slowed
down for Europe and the U.S., while capital goods made a negative contribution. The increase inexports in 1999 was led by producer goods such as transformers and fixed condensers. Exports
of producer goods are still increasing, mainly to Asia.

20

Development Bank of Japan Research Report/ No. 9

Figure 1-24. Trend of Export Volume (Change on previous year)
Export volume by destination(%)
15

OthersAsia
Europe
U.S.

10

World

5

0

-5

-10
95

96

97

98

99

2000
(CY quarterly basis)

Shipment for exports by type of industrial goods (seasonally adjusted)(%)
20

Producer’s goods
生産財
Consumer non-durables
非耐久消費財Consumer durables
耐久消費財
Construction materials
建設財Capital goods
資本財
Total
全体

15
10
5
0
-5
-10
95

Sources:

96

97

98

99

2000
(CY quarterly basis)

Japan Tariff Association, “Summary Report on Trade of Japan;” Ministry of International Trade andIndustry, “Summary of Analysis of Mining and Manufacturing Industrial Activities.”

Development Bank of Japan Research Report/ No.9

21

Import volume (Figure 1-25) fell on the previous year in the fourth quarter of 1997 due tothe sluggish domestic demand, falling by as much as 6.8% in the third quarter of 1998. After
turning upward in the first quarter of 1999 (up 4.0%), it increased for six consecutive quarters, as
domestic demand bottomed out and the yen strengthened.
By origin, imports from Asia, which had made large negative contributions until the third
quarter of 1998, recorded double-digit increases for five consecutive periods from the second
quarter of 1999. On the other hand, imports from Europe and the U.S. have not picked up
significantly.
By type of goods, Figure 1-25 indicates that the negative contributions from producer goods
and capital goods were largely responsible for the decrease in imports in 1998. In 1999, therecovery of domestic production boosted imports of producer goods and capital goods, while
non-durable consumer goods such as clothing and dairy and meat products led the overall
increase in imports.
Imports started to rise in the first quarter of 1999, while exports started to recover a little
later (3Q/99) but have continuously increased since then. On balance, net exports in fiscal 1999
were smaller than in the previous year. In the first quarter of 2000, however, net exports were up
on the previous year as well as on the previous period, due to the large increase in exports to Asia.
The current account surplus continued to shrink for some time due to the rapid increase inimports from Asia and the impact of higher oil prices.

22

Development Bank of Japan Research Report/ No. 9

Figure 1-25. Trend of Import Volume (Change on previous year)(%)
20

Import volume by origin
OthersAsia
Europe
U.S.

World

16
12
8
4
0
-4
-8
95

96

97

98

99

2000
(CY quarterly basis)

Import by type of industrial goods (seasonally adjusted)(%)
25

Producer’s
生産財 goods
Consumernon-durables
非耐久消費財Consumerdurables
耐久消費財
Construction
materials
建設財
Capital
goods
資本財
Total
全体

20
15
10
5
0
-5
-10
95

Sources:

96

97

98

99

2000
(CY quarterly basis)

Japan Tariff Association, “Summary Report on Trade of Japan;” Ministry of International Trade andIndustry, “Summary of Analysis of Mining and Manufacturing Industrial Activities.”

Development Bank of Japan Research Report/ No.923

8. Wholesale Prices: Bottoming out, Consumer Prices: Still Weak
International commodity prices (Figure 1-26), mostly composed of primary products excluding
crude oil, have been improving gradually. The decline in international commodity prices on theprevious year slowed down in 1999 as the world economy recovered, led by Asia, and the firstquarter of 2000 saw the first rise in commodity prices in 15 quarters.
As shown in Figure 1-26, the decline in wholesale prices (domestic demand goods) slowed
down from the second quarter of 1999 due to the progress in inventory adjustment and rising oil
prices, but then recorded the first increase in nine periods in the first quarter of 2000. Althoughwholesale prices appear to be bottoming out for raw materials and intermediate goods, the pricesof final goods continue to fall.
Figure 1-26. Trend of Commodity and Wholesale Prices (Domestic)(Contribution to year-on-year change)(Change on previous year)

5%

25%

4%

20%

3%

15%

2%

10%

1%

5%

0%

0%

-1%

-5%

-2%

-10%

-3%

-15%

-4%
90

91

92

93

94

95

Raw materials
Final goods
International commodities (excl. crude oil, right scale)

Note:
Sources:

24

96

97

98

-20%
99
00
(CY quarterly basis)

Intermediate goods
Domestic demand goods

Wholesale prices represent the average of domestic and import prices for domestic demand goods.
Bank of Japan, “Price Indexes Monthly;” IMF, “International Financial Statistics.

Development Bank of Japan Research Report/ No. 9

The decline has been slowing for corporate service prices (Figure 1-27), but the downward
pressure from deregulation in the communication and finance sectors still prevents any
substantial recovery.
Figure 1-27 shows the trend of consumer prices for commodities and services. Prices ofcommodities (agricultural, marine, livestock and industrial products) have been falling since thethird quarter of 1998. Although the larger drops since the fourth quarter of 1999 are largely
attributable to the substantial fall in fresh food prices, the decline in prices of imported durable
goods and textile products due to the yen appreciation and intensified price competition has also
made a significant contribution.
In addition, service prices remain weak including personal and public services. Substantial
downward pressure comes from the exemption of the elderly population from pharmaceuticalpayments, as well as from declining prices for recreation, eating-out and telecommunications. As
a result, the composite consumer price index is still weak.
Figure 1-27. Trend of Corporate Service and Consumer Prices (Goods and services)(Contribution to year-on-year change)
4%
3%
2%
1%
0%
-1%
-2%
95

96

97

98

99

00
(CY quarterly basis)

Agricultural, marine, livestock and industrial products
Personal services, etc.
Public services, etc.
Corporate service price index
Composite consumer priceNotes:

Sources:

1. Personal services, etc. include publications, rent and restaurant. Public services, etc. include electricity,
city gas and water supply.
2. Corporate services include lease/rental, transport, communications, real estate rental, bankcommission, insurance premium, etc.
Bank of Japan, “Price Indexes Monthly;” Management and Coordination Agency, “Consumer Price
Indexes Monthly.”

Development Bank of Japan Research Report/ No.925

Figure 1-28 illustrates the impact of the crude oil prices on domestic wholesale andconsumer prices. The data represent the result of a regression analysis, in which domestic
wholesale prices or the composite consumer index excluding the rent attributable to ownedhouses is regressed for prices of imported oil. The variables were measured at ten-year intervals
and respectively converted into logarithms. The lines indicate the change in the coefficient ofdeterminants when the measurement period is shifted by one year for each year since 1970 (see(Note) 2. in Figure 1-28).
The result suggests that the impact of imported oil prices on wholesale and consumer prices
has been declining over the long term. This phenomenon may be partially explained by thereorientation of the Japanese industrial structure toward energy saving and the yen appreciation,
as well as by the difficulty in passing oil prices on to the outputs due to greater price competition.
The analysis shows that the current rise in crude oil prices has much less impact on prices ingeneral than the rise up to the early 1980s.
Figure 1-28. Relationship between Imported Oil Prices and Domestic Wholesale andConsumer Prices(Coefficient of determination)
1.0
0.9
0.8
0.7
0.6
Domestic wholesale prices

0.5
0.4
Consumer prices

0.3
0.2
0.1

(measurement period)

Notes:

Sources:

26

90-99

89-98

88-97

87-96

86-95

85-94

84-93

83-92

82-91

81-90

80-89

79-88

78-87

77-86

76-85

75-84

74-83

73-82

72-81

71-80

70-79

0.0

1. The following formula is used for measurements on a quarterly basis.
ln (domestic wholesale prices or composite consumer prices excluding the rent attributed to ownedhouses) =α+β*ln (imported oil prices)
2. Among the oil products including crude oil for which data are available from 1Q/70, imported oil
prices represent weighted average of naphtha, heavy oil A and heavy oil C.
Bank of Japan, “Price Indexes Monthly;” Management and Coordination Agency, “Consumer Price Index
Monthly.”

Development Bank of Japan Research Report/ No. 9

9. Employment Conditions: Harsh Despite Recovery in Job Offers
Figure 1-29 shows the trend of principal macroeconomic employment indicators (the ratio of job
offers to applicants, unemployment rate, employment conditions). The ratio of job offers toapplicants recovered from a low of 0.46 in June 1999 to 0.59 in June 2000. This slight
improvement in the job market is due to the rise in effective job offers since September 1999,(up 0.8% from the previous year in September 1999 and 21.6% in May 2000).
The employment conditions ( = “surplus” – “shortage”) reported in the Tankan businesssentiment survey published by the Bank of Japan still points to excessive employment. The
indicator remained at a high level of 14 in the second quarter of 2000, after peaking in the firstquarter of 1999 at 24.
Likewise, unemployment rate remains high at 4.7% in June 2000, even though it recovered
slightly from a high of 4.9% in February-March 2000. During the previous economic recovery(from 4Q/93 to 1Q/97), the unemployment rate continued to rise at the earlier stage while theratio of job offers to applicants increased slightly and the employment conditions improved
gradually. Although unemployment rate leveled off at the latter stage, it did not show significant
improvement. This experience does not bode well for the job market.
Figure 1-29. Long-term Trend of Macroeconomic Employment Indicators
(%)

(%)

5

30
20

4

10
0

3

-10
2

-20
-30

1

-40
0

-50
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)
Employment condition (right scale)
Note:
Sources:

Unemployment rate

Ratio of job offers to applicants

Employment condition = “surplus” – “shortage.”
Management and Coordination Agency, “Labor Force Survey;” Ministry of Labor, “Statistics on
Placement Activities;” Bank of Japan, “Tankan.”

Figure 1-30 shows the trend of unemployment rate by relationship with the householder.
Currently, unemployment rate is at record high levels for householders and their spouses (3.6% andDevelopment Bank of Japan Research Report/ No.927

3.3% respectively). The unemployment rate of “other family members” including unemployed new
graduates is also high after posting a record high this spring (9.0% in March 2000). By age group,
the average unemployment rate in January-June 2000 exceeds last year’s level for all age groups.
Unemployment rate is particularly high among the younger generation between 15 and 34 years old
as well as among the older population between 45 and 64 (Figure 1-31).
Figure 1-30. Unemployment Rate by Relationship with Householder
(%)
9
8
7
6
5
4
3
2
1
0
95

96

97

98

00

(CY quarterly basis)
Spouses of householders
One-person households

Householders
Other family members
Source:99

Management and Coordination Agency, “Labor Force Survey.”

Figure 1-31. Unemployment Rate by Age Group
(%)
10
2000
8
199
6
1995
4
2
0
15～24
Note:
Source:

28

25～34

35～44

45～54

CY average. January-June average for 2000.
Management and Coordination Agency, “Labor Force Survey.”

Development Bank of Japan Research Report/ No. 955～6465～ (Age)

The number employed has stayed below the previous year’s level since the second quarter of1998 (Figure 1-32). Although seasonally adjusted data indicate a recovery from the bottom inMarch 2000 (at 64.14 million), future prospects are not good for the following three reasons.
First, labor demand is still weak in industries other than services andtransport/communications, as the number employed continues to fall in the manufacturingsector and has turned down again in construction, wholesale/retail and restaurants.
Figure 1-32. Number Employed by Industry(Change on previous year)
(%)
2
1
0
-1
-2
-3
-4
95

96

97

98

99

00
(CY quarterly basis)

Construction
Transport/communications
Total

Source:Manufacturing
Services

Wholesale/retail, restaurants
OthersManagement and Coordination Agency, “Labor Force Survey.”

Second, the increase in labor demand has not led to any increase in regular employment fora considerable period of time. Figure 1-33 shows the change in regular employment and in
temporary/daily employment separately. Regular employment has stayed below the previous
year’s level since the first quarter of 1998. Meanwhile, there has been a constant increase intemporary/daily employment, which represents irregular workers with lower labor cost for
employers.
Third, although the reduction of employees in large companies (employing 500 or moreworkers) has slowed down considerably since the third quarter of 1999, the number employed bysmall (employing 1-29 workers) and medium-sized (30-499 workers) companies continues todecline (Figure 1-34). Smaller companies have traditionally led employment recoveries, but notfor the current economic recovery. Employment may have been adversely affected by theincrease in corporate bankruptcies since October 1999, when the effect of the special guarantee
scheme for small- and medium-sized enterprises began to faded out.

Development Bank of Japan Research Report/ No.9

29

Figure 1-33. Contribution to Change in Number Employed (Non-agricultural Sector)
(%)
3
2
1
0
-1
-2
95

96

97

98

Part-time and daily workers

99

Full-time workers

00(CY quarterly basis)
Total

Source: Management and Coordination Agency, “Labor Force Survey.”

Figure 1-34. Contribution to Change in Number Employed (Non-agricultural sector
excluding government)
(%)
3
2
1
0
-1
-2
95

96
1-29 employees

Source:309730-499 employees

9899

500 employees or overManagement and Coordination Agency, “Labor Force Survey.”

Development Bank of Japan Research Report/ No. 900(CY quarterly basis)
Total

10. Interest Rates: Stable at Low Levels, Lending: Still Shrinking
The Bank of Japan ceased its zero interest rate policy on August 11, and so inter-bank overnight
lending rates (unsecured) have been guided to be around 0.25% since then (Figure 1-35). Yields
on three-month CDs have shown a slight increase. Long-term interest rates have made a
relatively small movements between 1.5% and 2.0% since June 1999.
Figure 1-35. Trend of Long-term and Short-term Interest rates
(%)
2.5
2.0
1.5
1.0
0.5
0.0
98/1

3

5

7

9

11

99/1

3

5

Inter-bank overnight lending rate
Yield on long-term government bonds
Notes:
Source:7911 2000/1 3

5
7(year/month)Three-month CDs (buy)Five-year financial bonds

1. Five-year financial bonds are represented by Industrial Bank of Japan debentures.
2. Three-month CDs are represented by the quotation (buy) rate on new issues.
Nihon Keizai Shimbun.

Money supply (M2+CD) grew by more than 3.5% from fiscal 1998 to the first half of fiscal
1999, dropped to a low of 1.9% in the latter half of the year, and is now around 2% (Figure 1-36).
In detail, there has been a reduction of quasi-money (term deposits, etc.) and CDs, as well as
slower growth of deposit currencies, both reflecting the weak lending activity.
Outstanding bank credits have been dropping since fiscal 1998, falling by over 2%, and fiscal
1999 saw an even faster decline (Figure 1-37). By the end of July 2000, the pace of decline had
slowed somewhat to 4.5% on the previous year, but still stood at 2.0% excluding extraordinary
factors such as the sales and write-offs of credits, thus indicating no significant changes in the
downtrend.

Development Bank of Japan Research Report/ No.9

31

Figure 1-36. Growth of Money Supply
(%)
6
5
4
3
2
1
0
-1
-2
-3
98/1

3

5

7

9

11

Cash currency
Note:
Source:

99/1

3

5

Deposit money

7

9

11

Quasi-money

00/1

3

CD

5

7

Total

Average balance, change on previous year.
Bank of Japan, “Financial and Economic Statistics Monthly.”

Figure 1-37. Credit Balance of National Banks(Change on previous year)
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%
98/1

4

7

10

99/1

4

7

10

2000/14
7(year/month)Credit balance of national banks
Credit balance of national banks (adjusted for irregular factors)
Real deposits + financial bonds + loan trusts
Note:
Source:32

Real deposits do not include money deposited with long-term trust banks or held in trust.
Bank of Japan, “Trend of Credit Absorption.”

Development Bank of Japan Research Report/ No. 9

II. Information Technology and the Economy
1. Concepts of IT (Hardware) Investment
As the use of the term “information technology (IT)” has expanded rapidly in recent years,
various analyses on plant and equipment investment trends now focus on IT investment. The
concept of IT investment is confusing in two senses. First, its definition is not necessarily
uniform, and second, it encompasses various concepts with different characteristics. Moreover,the definition of IT investment requires two steps: First, the selection of “coordinate axes,” i.e.
the type of equipment, or the type of industries, or both. Second, the selection of “scope,” i.e.
what should be considered as IT-related for the selected axis.
In addressing IT investment, the prevailing method of axis selection exclusively concerns thetype of equipment (Definition 1). This definition, which is adopted by the NIPA statistics in the
U.S. (referred to as “information processing equipment” instead of “information technology”), isconvenient for making comparisons between Japan and the U.S.4 It should be noted, however,that this encompasses the investment in IT user companies to improve productivity, to reduce
costs or to expand sales channels, as well as the investment by suppliers of IT-related goods andservices, such as the communication equipment purchased by telecommunication companies.
The once popular term “information-related investment” primarily referred to the former type ofinvestment and some analyses may well use this concept to focus only on IT users (Definition 2).
IT investment can be defined more broadly. This definition adopts both equipment andindustries as coordinate axes and considers their combination as IT investment (i.e. includes all
investments related to IT in terms of either equipment or industries). According to this definition,
the acquisition of semiconductor manufacturing instruments (not included in IT as equipment)by semiconductor manufacturers (industry supplying IT-related goods and services) is typically
included in IT investment (Definition 3)5.
An increase in IT investment may have a different background or impact according to whichof the definitions is adopted6. Acknowledging such diverse concepts of IT investment, thefollowing sections deal with measurements and fact-finding on this type of investment.

4 A substantial difference exists between Japan and the U.S. as to the scope of IT equipment, thus requiring adjustments in making

comparisons. In the NIPA statistics, a wide range of “OA/FA equipment” and “high-tech equipment” is included in IT
equipment, whereas construction and civil engineering facilities for telecommunication are often included in Japan when they are
related to IT.
5 The concept of IT investment cited in newspapers is considered to be similar to this definition.
6 For example, the narrowest definition 2 explains the increase in IT investment only by the domestic companies, whereas
Definition 1 also considers the behavior of Japanese consumers as well as that of foreign companies and consumers. The scopeis even wider in the broadest definition 3.
Development Bank of Japan Research Report/ No.933

2. Trend of IT Facility (Hardware) Investment
Figure 2-1 focuses on the IT-related items in private fixed capital formation (excluding housing
and software; historical price basis) appearing on the Fixed Capital Matrix in the Input-Output
Tables for 19957. The types of equipment are shown vertically, and the types of industry
horizontally (activity basis).
Figure 2-1.

IT Investment in Private Fixed Capital Formation (1995, in ¥ trillion)
Industry

IT-userindustries

IT-supplying industries
Electronic/
communication
Information
Communications
equipment
servicesmanufacturer

Goods

Privatesector
total

Japan

U.S.

0.2

0.1

5.0d

5.5

○

○

0.1

1.7

0.0

1.1e

3.0

○

○

0.0

0.0

0.0

1.1

1.2

○

○

Applied electronic devices (Note 5)

0.1

0.0

0.0

1.2

1.2

○

Other related equipment (Note 5)

0.3

0.1

0.0

2.7

3.0

○

0.0

0.7

0.0

0.0

0.8

○

(IT-related equipment sub-total)

(0.6)

(2.7)

(0.2)

(11.1)(14.6)(10.4)

Non-IT plant and equipment

1.3

1.0

0.2

54.7

57.2

Private non-housing fixed capital formation total

1.9a

3.7b

0.4c

65.9

71.9

Equipment

0.2

IT-related facility

Core Electronic calculators (Note 4)

General scope of IT
equipment (Note 3)

Telecommunication equipment (Note 4)
Gray Office equipment (Note 5)

Construction/civil engineering(telecommunication facilities)(13.9)

Plant and equipment investment by the industries supplying IT goods and services (a + b + c)
6.0 (share in gross fixed capital formation excluding housing: 8.4%)
Investment in (core) IT equipment by the IT user industries (d + e)
6.1 (8.5%)
Notes:

Source:1. All values are converted into purchase prices. The sum of each column does not necessarily equal the
total due to rounding.
2. Excludes software.
3. General scope of IT equipment is based on the definition most widely used since JDB Chosa No.208
for Japan, and on the definition in the NIPA statistics for the U.S. (The correspondence with theJapanese Input-Output Table is based on Ministry of International Trade and Industry, “Analysis ofIndustrial Activities, Annual Review for 1999.”
4. Data for computers represent the sum of main parts and accessory devices. Telecommunication equipment
does not include “other telecommunication equipment” (security devices for traffic signals, etc.).
5. Office machines include copying machines and word processors, etc. Applied electronic devices
include X-ray apparatuses, applied electronic devices for medical purposes, numerical control devices,
etc. Other related equipment includes electrical measuring instruments, analytical equipment, medical
instruments, AV equipment, cameras, etc.
1995 Input-Output Table, Fixed Capital Matrix.

7 Conceptually, it is similar to plant and equipment investment by private companies in the National Income Statistics.

34

Development Bank of Japan Research Report/ No. 9

The broadest definition of IT-related equipment is used here. The types of equipment which
are always classified as IT equipment are included in the “core” area, and other types ofequipment are placed in the “gray” area (darker gray indicating weaker relationship with IT). As
regards the types of industry, the electronic and communication equipment manufacturers in theelectrical machinery industry, as well as the telecommunication and information service industries
are defined as suppliers of IT goods and services. All other industries are regarded as IT-userindustries8.
According to Definition 1 in the previous section, which exclusively focuses on the types ofequipment, IT equipment (hardware) investment in 1995 is estimated to be ¥10.4 trillion basedon the broadly-used classifications in Japan (see circles in the Figure), and ¥13.9 trillion based on
the classifications in the NIPA statistics (also see circles in the Figure) of the U.S.A. Thus, of thetotal private fixed capital formation of ¥71.9 trillion, IT investment accounts for 14.5% in theformer case, and 19.3% in the latter case (the so-called “IT investment ratio,” nominal basis).
In order to distinguish between investments with different characteristics, plant andequipment investment (regardless of the types of equipment) by the suppliers of IT-related goods
and services was calculated separately from the IT equipment investment (core area) in the ITuser industries. The latter approximately corresponds to the Definition 2 in the previous section,or the concept of “information investment” used in the past (excluding that part attributable tothe IT-supplying industries)9. The plant and equipment investment in the IT-supplying industries
amounted to ¥6.0 trillion in 1995, while the amount of “information investment” in the IT-userindustries stood at ¥6.1 trillion. The sum of ¥12.1 trillion corresponds to the broadest concept(Definition 3 in the previous section).
Again based on the concept of Definition 1, Figure 2-2 shows the share of each industry inthe ¥8.5 trillion invested in core IT equipment by both the IT-user and IT-supplying industries in
1995. The result indicates that leasing services account for almost 40% of the total amount,attesting to the advancement of the rental and leasing of IT equipment10. Excluding the ITsupplying industries, the finance/insurance industry is the most active buyer of IT equipment.
Figure 2-3 indicates the share of core IT equipment in total plant and equipment investment byindustry as of 1995. In addition to the leasing service and IT-supplying industries, substantial
shares exist in broadcasting and finance/insurance.
Although IT investment has drawn people’s attention by its rapid growth, it is also importantto follow the chronological developments in view of the diverse concepts of IT investment andobserve them closely.

8 As IT users include leasing services, the equipment rented or leased from leasing services to IT suppliers is credited to user

industries.
9 If the analysis focused on the amount of “information investment,” more detailed calculations should be conducted by regarding

as user investments the purchase of computers and communication equipment by the electronic/communication equipment
manufacturers as well as the purchase of electronic calculators by the telecommunication industry, for example.
10 Leasing services only account for about 10% of gross fixed capital formation.
Development Bank of Japan Research Report/ No.9

35

Figure 2-2. Industries with Large Share in Private IT Equipment Investment (1995)
Leasing services
Communications
Finance/insuranceElectronic & communication equipment
Other electrical machinery
RetailPower/gas/heat supply
Transport
Broadcasting
Construction
Information services
0

10

20

30

40
(%)

Figure 2-3. Industries with High IT Equipment Investment Ratios (1995)
Communications
Broadcasting
Leasing services
Finance/insurance
Information services
Advertisement & research services
Electronic & communication equipment
Other electrical machinery
Precision machinery
Construction
Retail0

Notes:

Source:

36

10

20

30

40

50

60
(%)

1. Purchase prices.
2. Excludes software.
3. Industrial shares represent percentages of total private investment in (core) IT equipment in allindustries including IT suppliers (¥8.5 trillion).
4. “Other electrical machinery” refers to electrical machinery excluding electronic and communicationequipment.
1995 Input-Output Tables, Fixed Capital Matrix.

Development Bank of Japan Research Report/ No. 9

Figure 2-4a estimates the trend of core IT equipment investment since 1990 according to
Definition 111, and compares it with the trend of plant and equipment investment on a GDP
basis (both indices on a nominal basis, 1995=100). As in the case of plant and equipment
investment in general, IT equipment investment has moved in parallel with the business cycle,
but has also shown a constant upward trend. Indeed, the index stands at 96 for total plant andequipment investment as of 1999, while it amounts to 117 for IT investment, attesting to its
increased weight. A closer look at the cyclical movement indicates that IT investment led therecovery of overall plant and equipment investment in 1994, at the initial stage of the previous
economic recovery. This was also the case in 1999, when the economy last hit the bottom.
Influenced by the New Economy argument in the U.S., many emphasize the current increase inIT equipment investment, asserting that it suggests some sort of structural change. However, theabove observation confirms that a significant growth of IT investment during an economic
recovery is not a new phenomenon in itself. Figure 2-4b estimates the trend of real IT equipment
investment using WPI by product (1995=100). The index rose to a high of 158 in 1999 (106 forthe whole plant and equipment investment12), suggesting that the decline in prices of IT-related
equipment is closely related with the growth of real IT equipment investment and the IT
investment ratio. In conducting positive analysis or in interpreting the result of the analysis on
the economic implications of IT, such as the impact of IT investment on productivity, data
should be examined thoroughly, noting that the rapid price reduction results in a considerable
divergence between nominal and real values.

11 The Figure uses the series of shipment values for domestic capital goods calculated as the production/shipments by productappearing in the Industrial Statistics Table adjusted for export/import and consumer durables, such as PCs and cellular phones.
12 The series of real IT equipment investment is estimated using WPI with 1995 as base year, while total plant and equipment

investment represents the real series of 1990 prices according to the National Income Statistics. Therefore, a precise comparison
between the two series is not possible.
Development Bank of Japan Research Report/ No.9

37

Figure 2-4. Trend of IT Equipment Investment (1995=100)
Figure 2-4a. Nominal value

160
140

127

126

120

114

117

98

99
(CY)

100
100
80
60
90

91

92

93

94

IT equipment investment

95

96

97

Private plant and equipment investment

Figure 2-4b. Real value
160
140

146

158

155
147

120
100
100
80
60
90

91

92

93

94

IT equipment investment
Notes:

Sources:

38

95

96

97

98

99
(CY)

Private plant and equipment investment

1. As in the previous page, IT equipment is limited to core equipment. The index represents the trend of
shipments for domestic capital goods calculated by DBJ. Real values are calculated using domestic
wholesale price index (1995 as base year) for individual products.
2. Private plant and equipment investment is taken from Economic Planning Agency, “National Income
Statistics.” Real values represent 1990 prices.
Ministry of International Trade and Industry, “Census of Manufacturers,” “Yearbook of Machinery
Statistics,” “Directory of Industrial Indices;” Electronic Industries Association of Japan, “Trend of
Electronic Industries;” Bank of Japan, “Price Indexes Monthly;” Economic Planning Agency, “National
Income Statistics.”

Development Bank of Japan Research Report/ No. 9

Let us examine the impact of IT investment separately for the IT-supplying industries(regardless of the type of equipment) and for the IT-user industries (investment in IT equipment).
Figure 2-5 breaks down the contribution by both industries to year on year change in realmachinery orders. It indicates that during the previous phase of economic expansion, IT
equipment investment by the user industries made substantial contributions in 1996 and 1997,
possibly prolonging the expansion of total plant and equipment investment through the ripple
effect on the IT-supplying industries. In the current phase of recovery, total investment is solely
led by the IT-supplying industries, with little contribution coming from users. Although thecurrent increase in investment in the IT-supplying industries is often discussed in conjunction
with the advancement of IT in the corporate sector in general, at least for the moment it is largely
attributable to the growth of consumer and foreign demand for IT equipment and services.
Figure 2-5. Contribution of IT to Year-on-Year Change in Real Machinery Orders
(%)
30

20

10

0

-10

-20
90

91

92

93

94

95

96

97

98

99

00

(CY quarterly basis)
IT-supplying industries
Notes:

Sources:

Investment in IT equipment by IT-user industries

Others

1. Civil demand excluding ships and electricity.
2. IT investment by IT-supplying industries refers to orders received from the electrical machinery,communication and information service industries. IT investment by IT-user industries refers toorders for computers and communication equipment received from industries other than IT-supplying
industries. Machinery orders do not include most of PCs (except when they are purchased as systemterminals), but include cellular phones including for personal use. Orders received through the leasing
industry are allocated to final user industries but attributed to the leasing industry (included in othernon-manufacturing industries) when the final user cannot be identified.
Economic Planning Agency, “Machinery Orders Statistics;” Bank of Japan, “Price Indexes Monthly.”

Development Bank of Japan Research Report/ No.9

39

3. Trend of Software Investment
Based on a questionnaire survey by the Ministry of International Trade and Industry, Figure 2-6
shows the composition of corporate expenses related to data processing. Since the 1980s, theshares of hardware-related and personnel expenses have declined almost continuously, while
those of software, service and communication-related expenses have risen. This movement
implies that companies have shifted their emphasis over the years to software, outsourcing andnetworking.
Figure 2-6. Composition of Corporate Expenses Related to Data Processing
(FY)
80
85
90
95
96
97
98
0

Notes:

Source:

40

20

40

60

80

100

Depreciation of hardware
Hardware rental & lease
Hardware settlement expenses and maintenance charges
Software-related expenses
Service-related expenses
Communication-related expenses
Personnel cost
Other expenses(%)

1. The sampling method was substantially revised in the fiscal 1996 survey conducted in 1995, whichmakes a break from the previous data.
2. Software-related expenses represent the total of software user charges, software purchasing cost andsoftware production charges.
3. Service-related expenses include data production/input charges, online service charges, external
personnel cost, etc.
4. Other expenses include rent for computer rooms, shared expenses, depreciation, repair charges,
electric fees, cost of office supplies, etc.
Ministry of International Trade and Industry, “Survey on Data Processing”.

Development Bank of Japan Research Report/ No. 9

In the current system of national accounts (68SNA), software is treated as intermediate
consumption except when it is pre-installed in hardware (Figure 2-7). As the importance ofsoftware in information technology has increased, however, the new system of national accounts(93SNA)13 would recognize as an intangible fixed asset any software that will be used for one
year or longer, and that the purchase of such software would be treated as plant and equipment
investment. Although software for general use (package software) and in-house software will stillbe treated as intermediate consumption in Japan due to the lack of basic statistics, orderedsoftware will be accounted for as fixed capital formation in response to 93SNA. As a result, GDPas well as private plant and equipment investment will be pushed up by the corresponding
amount14. According to the 1995 Input-Output Table, which already incorporated this idea,
investment in ordered software amounted to ¥3.2 trillion, which is equivalent to 4.4% of total
plant and equipment investment in 1995 excluding software. By tracing the estimation method
used in the Input-Output Table as far as possible,15 software investment increased steadily from
¥2.5 trillion in 1990 to ¥4.6 trillion in 1998 in value, and from 3.0% to 6.1% as a percentage of
total plant and equipment investment (Figure 2-8a).
Figure 2-7. Treatment of Software Investment in National Income Statistics
Current system (based on 68SNA)

New system (based on 93SNA)

Pre-installed in hardware

Treated as fixed capital formation withmainframes

Treated as fixed capital formation withmainframes

OthersoftwareOrderedIntermediate consumption

Treated as (intangible) fixed capital formation

General use

Intermediate consumption

Intermediate consumption

In-house

Intermediate consumption

Intermediate consumption

The concept of 93SNA was already introduced in the Input-Output Table for fiscal 1995 (May 1999). It will be
introduced in the National Income Statistics by the end of October 2000 to coincide with the transition to the 1995
standard.
Sources: Economic Planning Agency, “The Recent Opinions on Japan’s GDP Figures and Our Approach,” etc.

13 The current system of national accounts (SNA) in Japan is based on the standard recommended by the United Nations in 1968

(68SNA). Since the adoption of its revised version in 1993 (93SNA) in light of subsequent changes in economic environment,
countries have been developing new SNAs to incorporate the new standard. (Although the U.S. has its own system apart from
SNA, software has been included in fixed capital formation since October 1999.) In Japan, the new national accounts based on
93SNA will be published by the end of October 2000 to coincide with the transition to the 1995 standard. However, the shift to
93SNA has already been made in the Input-Output Table for 1995 published in May 1999.
14 In the NIPA statistics of U.S.A., all software is treated as fixed capital formation including general-use and in-house software.
15 Software investment is estimated on the basis of ordered software sales in the Survey on the Condition of Specified Service
Industries. Adjustments are made for the discontinuities due to the revision of the population with reference to the Statistics ofBusiness Establishments and the Survey on Service Industries.
Development Bank of Japan Research Report/ No.9

41

Although very few statistics are available for in-house software, a rough estimate can bemade from the number of data-processing technicians according to the 1995 Census. Supposethat the technicians belonging to the software and data-processing industries are involved in the
production of ordered software, and that the technicians employed in other private sector
industries are involved in the production of in-house software. The latter workers account forjust under 60% of the former workers (Figure 2-8b). If the productivity of the two groups oftechnicians is the same, investment in in-house software amounts to almost ¥2 trillion (¥3.2
trillion × 60%).
Figure 2-8. Software Investment (¥ trillion)
Figure 2-8a
1990

1995

1998

Software investment (a)

2.5

3.2

4.6

Private plant and equipment investment (b)

83.1

72.1

75.5

a/b (%)

3.0

4.4

6.1

Figure 2-8b
Number of data-processing technicians employed (1995 Census, in 10,000 persons)
Software and data-processing service industries (c)37.8

Other private sector (d)22.3

d/c (%)

59.0

Note:

Software investment in 1995 is according to the 1995 Input-Output Tables, Fixed Capital Matrix. Data for1990 and 1998 are estimates according to Management and Coordination Agency, “Establishment andEnterprise Census,” “Survey on Service Industries;” Ministry of International Trade and Industry, “Surveyof Selected Service Industries.” Private plant and equipment investment is based on the National Income
Statistics and does not include software investment.

Finally, Figure 2-9 shows the shares of individual industries in the total software investmentof ¥3.2 million in 1995. Finance/insurance has the greatest share with over 20%, and excluding
the IT-supplying industries, non-manufacturing industries such as power/gas/heat supply,
advertisement/research services and transport followed. Figure 2-10 indicates that the share ofsoftware investment in total plant and equipment investment by industry as of 1995 is also
highest in the finance/insurance industry when the IT-supplying industries are excluded.

42

Development Bank of Japan Research Report/ No. 9

Figure 2-9. Industries with Large Share in Private Software Investment (1995)
Finance/insurance
Information services
Power/gas/heat supply
Electronic & communication equipment
Advertisement & research services
Transport
0

5

10

15

20

25
(%)

Figure 2-10. Industries with High Software Investment Ratios (1995)
Information services
Finance/insuranceElectronic & communication equipment
Publishing & printing
Precision machinery
Chemicals0
Note:
Source:

20

40

60

80
(%)

Figure 2-9 represents percentages of the private sector total. Software investment ratio represents a
percentage of gross fixed capital formation (which does not include software investment) excluding
residential investment in each industry.
1995 Input-Output Table, Fixed Capital Matrix.

Development Bank of Japan Research Report/ No.943

4. IT-related Production and Services
In the industrial sector, the production of computers, communication machines and officeequipment, which are closely related to IT (total share of 4.0% in industrial production as of1995), has only managed to edge up due to the stagnant growth of mainframes andcommunication facilities (Figure 2-11). This contrasts strongly with the substantial growth of PC
and cellular phone production. IT-related production is now led by parts including those for ITrelated equipment (total share of 8.7%), with a rapid growth since fiscal 1999.
Figure 2-11. IT Production in Industrial Production
Final products

(%)
60
50
40
30
20
10
0
-10
-20
-30
90

91

92

93

94

95

96

97

98

99

2000

(CY quarterly basis)
Computers (share: 2.17%)

Communication equipment (1.27%)(%)

Office equipment (0.55%)

Parts

50
40
30
20
10
0
-10
-20
-30
90

91

92

93

94

95

96

97

98

99

2000

(CY quarterly basis)

Semiconductor parts (share: 0.43%)
Integrated circuit (3.87%)

Note:
Source:44

Communication/electronic parts (3.76%)
Semiconductor elements (0.61%)

Change on previous year. Shares represent percentages of index (1995 as base year).
Ministry of International Trade and Industry, “Industrial Production Index.”

Development Bank of Japan Research Report/ No. 9

In the commerce/service sector, the share of IT business activities account for about 5%,
including mobile communication and other telecommunication and information services (1995 asbase year). While business activities other than IT have largely followed the business cycle, IT
business activities have continuously made substantial positive contributions (Figure 2-12). Suchcontributions have mostly come from the rapid growth of mobile communication, although the
expansion of information services has also played a role. Telecommunications other than mobile
communication show a cyclical movement.
Figure 2-12. IT-related Activities in the Commercial/Service Sector(Change on previous year)
Contribution of IT-related activities

5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
94

95

96

97

98

99

2000
(CY quarterly basis)

IT activities

OthersComposition of contribution

1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
-0.2%
-0.4%
94

95

96

97

98

99

2000
(CY quarterly basis)

Mobile communication

Note:
Source:Telecommunications

Information services

IT-related activities include mobile communication, domestic telecommunications (excluding mobile
communication), international telecommunications and information services.
Ministry of International Trade and Industry, “Tertiary Industry Activity Index.”

Development Bank of Japan Research Report/ No.945

5. Trend of Trade in IT-related Goods and Services
The trend of exports and imports of IT-related goods16 is shown in Figure 2-13. Exports peakedin fiscal 1997 and have since leveled off. The share of IT-related goods in total exports has also
leveled off and was 20.9% for fiscal 1999.
Imports are still increasing after growing substantially in fiscal 1995. The share of IT-related
goods in total imports also rose from only 4.8% in fiscal 1990 to 14.6% in fiscal 1999. The
increase has been led by office equipment.
Figure2-13. Trend of IT-related Exports and Imports¥ trillion
Trend of IT exports

12

24%
22%

10

20%

8

18%

6

16%

4

14%

2

12%

0

10%
90

91

92

93

94

95

96

97

98

99

(FY)

Trend of IT imports¥ trillion
6

16%
14%

5

12%

4

10%
8%

3

6%

2

4%

1

2%
0%

0
90

91

92

93

94

95

96

97

98

99

(FY)

Semiconductors and other electronic parts
Scientific and optical instruments
Communication equipment
Office equipment
Share in total exports and imports (right scale)

Source:Japan Tariff Association, “Summary Report on Trade of Japan.”Figure 2-14 shows the regional composition of IT-related trade partners of Japan. The shareof Asia has been increasing in both exports and imports, surpassing the shares of both the U.S.
16 For the purpose of this section, “IT-related” goods are defined as office equipment (including PCs), communication equipment,scientific and optical equipment (including LC devices and semiconductor production devices) and semiconductors and otherelectronic parts according to the product classifications in the Japan Tariff Association, “Summary Report on Trade of Japan.”46

Development Bank of Japan Research Report/ No. 9

and the EU. In particular, Asia’s share in IT-related imports rose significantly from 24.1% in
fiscal 1990 to 57.2% in fiscal 1999. This implies that the international division of labor has
progressed through the transfer of production facilities from Japan and the U.S.
Figure 2-14. IT-related Imports and Exports by Region
Trend of Japan's IT exports by destination

100%
80%
60%
40%
20%
0%
90

91

92

93

94

95

96

97

98

99

97

98

99 (FY)(FY)

Trend of Japan's IT imports by origin
100%
80%
60%
40%
20%
0%
90

Source:

91

92

93

94

Asia

U.S.

95
E.U.

96

OthersJapan Tariff Association, “Summary Report on Trade of Japan.”

Development Bank of Japan Research Report/ No.9

47

Figure 2-15 examines the progress in international division of labor concerning IT-related
goods, using the trade specialization coefficient (= (exports – imports) / (exports + imports)).
The progress can be observed from the downtrend of the coefficient with all trading partners(U.S., EU and Asia). In particular, the drop has been substantial in trade with Asia, which is fast
becoming a major exporter of IT-related goods to Japan. As far as office equipment is concerned,
Japan’s trade specialization coefficient with Asia fell below zero in fiscal 1995, indicating a trade
deficit. Also, the coefficient is low in trade with the U.S. for semiconductors and other electronicparts, showing that Japan is highly dependent on the U.S. for certain IT parts.
Figure 2-15. Trend of IT Trade Specialization Coefficient
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
90

91

92

93

94

95

96

97

98

99 (FY)

U.S.
E.U.
Asia
Semiconductors and other electronic parts with U.S.
Office equipment with Asia

Note:
Source:Trade specialization coefficient = (exports – imports) / (exports + imports). The coefficient equals 1 with
exports only and –1 with imports only.
Japan Tariff Association, “Summary Report on Trade of Japan.”

The composition of service trade is shown in Figures 2-16 and 2-17. Transport and travelaccount for the majority of the Japanese trade in services. The small shares of communications
and information indicate that the trade in IT services does not have much impact on service
trade as a whole.

48

Development Bank of Japan Research Report/ No. 9

Figure 2-16. Service Exports from Japan(1999)
Public andother services
1%

Other profitmaking businesses
27%

Transport
38%
Travel6%

Culture &entertainment
0%
Patent andother royalties
13%
Information
2%

Finance3%

Communications
1%
Construction
9%
Insurance0%

Figure 2-17. Service Imports to Japan
Other profitPublic andother services making businesses
Transport
23%
1%
Culture &27%
entertainment
1%
Patent andTravelother royalties
27%
9%
Information
3%
Communications
Finance1%
Insurance Construction
2%
2%
4%

Japan has trade deficits in both communications and information (Figures 2-18 and 2-19).
Figure 2-18. Communications

Figure 2-19. Information(¥ 100 million)
2,000(¥ 100 million)
3000

1,500

2000

1,000

1000

500

0

0

-1000

-500

-2000

-1,000-3000-1,500-2,000-4000-2,500

-5000
1996

1997

1998
Receipts
受取1996

1999 (CY)
Payments
支払

1997

1998

1999 (CY)

Balance
収支尻Development Bank of Japan Research Report/ No.949

6. IT-related Consumption and Widening Generation Gap
This section first examines the overall trend of information-related consumption17 in consumer
spending in order to examine the expansion of IT in the household sector from various aspects.
Figure 2-20 estimates real information-related consumption18 in the households covered by
the Family Income and Expansion Survey to examine the trend of its contribution to the yearon-year change in total consumer spending19. While “other consumption,” which is unrelated to
information, has seen its contribution decline rapidly, the contribution of information-related
consumption, IT-related consumption in particular has made positive contributions to the yearon-year change. As the perceived decline in IT-related prices has not been fully incorporated into
the statistical data20, it cannot be argued that the contribution of IT-related consumption has
become stronger over the years. Nonetheless, IT-related consumption is considered to haveplayed a role in supporting overall consumption.
Figure 2-20. Contribution of Real Information-related Consumption on Year-on-Year
Change in Total Consumption (All households)
(%)
5
4
3
2
1
0
-1
-2
-3
-4
-5
96

97
Others

Note:
Sources:98

Other information-related

99
IT-related

00(CY quarterly basis)

Total consumption

Consumer price index for each item is used as deflator.
Management and Coordination Agency, “Family Income and Expenditure Survey,” and “Consumer Price
Index.”

17 Information-related consumption is divided into “IT-related” consumption, which enables interactive exchange of information

through the media, and “other information-related” consumption, which mainly provide one-way information through themedia. Based on the classifications of the Family Income and Expenditure Survey, “IT-related” consumption includes IT goods(PCs, word processors, communication equipment) and telephone charges, whereas “other information-related” consumption
includes postal charges, TV, stereo sets, tape recorders, VCRs, TV games, audio and video discs, unused and recorded audio andvideo tapes, books and other printed matters (newspapers, magazines, etc.) and TV license fees.
18 Nominal values are deflated by consumer price index for each product to convert to real values. Calculations are only made for1995 and thereafter due the availability of data.
19 Total consumer spending represents the aggregate of all product classifications but excludes “pocket money (of which, detailed
uses unknown),” “social expenses” and “remittances.”
20 See “7. Reduction in IT-related Prices” for details.
50

Development Bank of Japan Research Report/ No. 9

Figure 2-21 shows the share of information-related consumption in total consumption(nominal basis) by type of family. Relevant data are available from 1987 for all households
covered by the Family Income and Expenditure Survey, and from 1995 for one-personhouseholds. For all households with two or more members, the share of information-related
consumption has risen since 1995 led by IT-related consumption to reach a level comparable tothe proportion of investment in human capital21 (from 5.4% in 1995 to 6.5% in 1999). In
contrast, the share of information-related consumption in one-person households is higher thanin family households (7.6% in 1995 and 8.5% in 1999) and far exceeds the proportion of
investment in human capital, which is less than 1%.
For both types of household, the share of IT-related consumption surpassed that of otherinformation-related consumption for the first time in 1999, and the weight of other informationrelated consumption has remained stable for a long time at around 3% or 4%.
With regard to the diffusion of IT in the household sector, many refer to the “digital divide,”
i.e. the growing inequity and economic gap between those who can benefit from IT and those
who cannot. The following section examines the difference in the weight of information-related
consumption between income groups and age groups.

21 Human capital investment includes education (school fees, reference books for study, tutorial fees in cram schools, preparatory

schools, etc.) as well as lesson fees (language, various learning and training), according to the product classifications in the Family
Income and Expenditure Survey.
Development Bank of Japan Research Report/ No.9

51

Figure 2-21. Weight of Information-related Consumption by Type of Household(a) All households with two or more members
(%)
9
8
7
6

Total （①＋②）

5① IT-related

4② Other information-related

3

Investment in human capital

2
1
0
87

88

89

90

91

92

93

94

95

96

97

98

99 (CY)(b) All one-person households
(%)
9
8
7
6

Total （①＋②）

5① IT-related

4② Other information-related

3

Investment in human capital

2
1
0
95
Note:
Sources:

52

96

97

98

99

(CY)

Weights are calculated in nominal terms.
Management and Coordination Agency, “Family Income and Expenditure Survey,” and “Income andExpenditure Survey for One-person Households.”

Development Bank of Japan Research Report/ No. 9

Figure 2-22 divides the households covered by the Family Income and Expenditure Survey
into the low income group (income brackets I and II) and the high income group (income
brackets IV and V). The share of information-related consumption is slightly higher in the low
income group for both IT and non-IT consumption. It can be observed, however, that the gap
between the two income groups is not so great as in the investment in human capital. (The gap istwice as large as in the latter case.)
Figure 2-22. Weight of IT-related Consumption in High Income and Low Income
Groups of All Family Households(c) Annual income brackets I + II
(%)
9
8
7
6

Total （①＋②）

5① IT-related

4② Other information-related

3

Investment in human capital

2
1
0
87

89

91

93

95

99 (CY)

97(d) Annual income brackets IV + V
(%)
9
8
7
6

Total （①＋②）

5① IT-related

4② Other information-related

3

Investment in human capital

2
1
0
87

Notes:
Source:

88

89

90

91

92

93

94

95

96

97

98

99 (CY)

1. Weights are calculated in nominal terms.
2. Annual income is on a pre-tax basis. Income bracket I earns the lowest income and bracket V thehighest income.
Management and Coordination Agency, “Family Income and Expenditure Survey.”

Development Bank of Japan Research Report/ No.9

53

The share of IT goods in IT-related consumption is shown in Figure 2-23. Although theshare is typically higher in the high income group than in the low income group, no significant
increase in the gap has been observed so far despite the widening income gap between the twogroups since the bubble period (up from 2.78 times in 1987 to 2.98 times in 1999). The
aggravation of the digital divide in the household sector cannot be observed, at least from theincome factor only.
Figure 2-23. Annual Income Gap and Weight of IT Goods
3.0

30
25

2.9

20
15
10

2.8

5
0
87

89

Weight of IT goods in (c)Note:
Source:91

93

Weight of IT goods in (d)

95

97

2.7
99 (CY)

Annual income gap (d/c, right scale)

The weight of IT goods represents the share in IT-related consumption (nominal).
Management and Coordination Agency, “Family Income and Expenditure Survey.”

However, the gap becomes clear when the households are classified according to the age ofthe householder (Figure 2-24). Householders in their 30s are closest to the average of allhouseholds as far as the trends of information-related consumption and the investment in humancapital are concerned. Householders in their 40s have increased the weight of information-related
consumption since 1995 despite the rising investment in human capital due to a heavier burdenof child education.
The gap is most significant between the youngest and the oldest age groups. The share of
information-related consumption increased most rapidly in the youngest age group of 29 orunder, from 5.8% in 1987 to 8.3% in 1999. In contrast, the share of information-related
consumption has remained unchanged in the age group of 60 or over (5.6% in 1987 and 5.7% in1999). The gap between the two age groups has been widening since 1995.

54

Development Bank of Japan Research Report/ No. 9

Figure 2-24. Weight of Information-related Consumption in All Family Households byHouseholder’s Age
(%)
14
12
10
8
6
4
2
0

29 or under
Total （①＋②）① IT-related② Other information-related
Investment in human capital

87

88

89

90

91

92

(%)
14
12
10
8
6
4
2
0

93

94

95

96

97

98

99 (CY)

30s
Total （①＋②）① IT-related② Other information-related
Investment in human capital

87

88

89

90

91

92

(%)

93

94

95

96

97

98

99 (CY)

40s

14
12
10
8
6
4
2
0

Total （①＋②）① IT-related② Other information-related
Investment in human capital

87

88

89

90

91

92

(%)
14
12
10
8
6
4
2
0

93

94

95

96

97

98

99 (CY)

50s
Total （①＋②）① IT-related② Other information-related
Investment in human capital
87

88

89

90

91

92

(%)

93

94

95

96

97

98

99 (CY)

60s

14
12
10
8
6
4
2
0

Total （①＋②）① IT-related② Other information-related
Investment in human capital

87

Notes:
Source:

88

89

90

91

92

93

94

95

96

97

98

99 (CY)

Weights are calculated in nominal terms.
Management and Coordination Agency, “Family Income and Expenditure Survey.”
Development Bank of Japan Research Report/ No.955

Moreover, this gap stems from IT-related consumption. While the share of IT-related
consumption surpassed that of other information-related consumption as early as in 1995 for 29
year-olds and younger, the former has not caught up with the latter for 60 year-olds and over. As
regards the share of IT goods in IT-related consumption (Figure 2-25), however, no remarkablewidening of the generation gap has been observed chronologically, although the weight of IT
goods tends to decline as the population ages. The generation gap in IT-related consumption islargely due to the difference in telephone charges. Indeed, phone bills for those aged 29 or under(¥9,939/month on average in 1999) are almost twice as large as for those aged 60 or over(¥5,362/month). Thus, IT consumption in daily life consists mostly of communications throughcellular phones rather than access to the Internet through PCs.
Figure 2-25. Weight of IT Goods by Householder’s Age
(%)
30
25
20
15
10
5
0
87

88

89

90

91

29 or under

Note:
Source:

56

92

93

30s

94

95

40s

50s

96

97

60 or over

The weight of IT goods represents the share in IT-related consumption (nominal).
Management and Coordination Agency, “Family Income and Expenditure Survey.”

Development Bank of Japan Research Report/ No. 9

98

99 (CY)Finally, Figure 2-26 shows the trend of household use of IT goods22 since 1995 by type ofhousehold and by income, as well as by type of household and by age of the householder.
By type of household, the use of IT goods has increased faster in family households (withtwo or more members) than in one-person households (rate of expansion from 1995 to 1999:
18.6% and 9.8% respectively). As in the case of expenditure, no significant widening has been
observed in the gap among family households according to income or age. The gap in IT use
between the high income group and the low income group only increased from 19.6% in 1995 to
26.1% in 1999. Meanwhile, the gap between those aged 29 or under and those aged 60 or overactually shrank from 11.2% to 8.6%.
On the other hand, the gap in IT use has been widening in one-person households between
income and age groups. The gap between the low income group and the high income group grew
substantially from 18.1% in 1995 to 32.8% in 1999, attesting to the slow progress of IT use in the
low income group. The gap also widened between the youngest and the oldest age groups from
27.1% to 38.4%, as the use of IT goods has hardly expanded among those aged 60 or over. The
wider gap in IT use among one-person households than in family households according toincome is largely attributable to the minimal spread of IT use among the elderly, who are also in
the low income group.
It is still uncertain how the diffusion of IT goods will improve the quality of life.
Nonetheless, it is now necessary to overcome the “IT illiteracy” that is prevalent among theelderly living alone, so as to ensure equal opportunities.
Figure 2-26. Trend of Household IT Use by Type of Household, Income andHouseholder’s Age(%)
Family households

One-person households

End
FY

Average

Low
incomeHighincome29 oryounger

60 or
older

Average

Low
incomeHighincome29 oryounger

60 or older

95

30.4

22.9

42.5

33.6

22.4

29.1

23.2

41.3

41.1

14.0

96

34.0

25.8

46.8

30.5

26.4

29.3

22.2

41.4

43.7

12.9

97

40.4

30.8

53.6

42.5

30.0

34.1

25.2

53.4

52.2

15.9

98

43.6

32.8

58.0

43.3

33.6

37.8

29.7

50.9

54.2

20.3

99

49.0

36.9

63.0

46.0

37.4

38.9

29.0

61.8

56.9

18.5

Note:

Annual income is on an after tax and social security charges. For family households, the low income groupearns less than ¥5.5 million and the high income group ¥7.5 million or more. For one-person households,
the low income group earns less than ¥3 million and the high income group ¥5.5 million or more.

22 IT goods for family households include PCs, facsimiles and push-button phones (including telephone sets with various functions

and cellular phones) according to the Survey on Consumption Trend. IT goods for one-person households include PCs,facsimiles, push-button phones, telephone sets with answering machines and cellular phones. The ratio of IT use in households
represents the simple average of all products.
Development Bank of Japan Research Report/ No.9

57

7. Decline in IT-related Prices
This section examines the impact of the emerging IT on domestic wholesale prices, corporate
service prices and consumer prices. The discussion covers the period since 1995 (since 1996 foryear-on-year changes) in all cases due to the availability of relevant data.
Figure 2-27 indicates the contribution of information-related prices23 to the year-on-yearchange in domestic wholesale prices. IT-related prices have declined continuously without
recovering in 1997, when the consumption tax rate was raised, thus exerting a greater downward
pressure on wholesale prices than other information-related prices. Since around 1998, however,
IT-related prices have only declined by 0.3-0.4% on the previous year, though this movement
might not necessarily reflect the actual trend.
Figure 2-27. Contribution of Information-related Prices to Year-on-Year Change in
Domestic Wholesale Prices
(%)
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
96

97

98

99

00
(CY quarterly basis)

Others

Note:
Source:Other information-related

IT-relatedDomestic wholesale prices

The contribution of “others” is calculated as residual.
Bank of Japan, “Price Indexes Monthly.”

23 The weight of information-related prices in domestic wholesale prices (1995 as base year) is 10.4%. “IT-related” goods (with aweight of 8.9%) include word processors, communication equipment, paper for information equipment, communication cables,
applied electronic devices, electronic parts and electronic devices. “Other information-related” goods (1.5%) include color TV,
VCRs, video disk players, car navigation systems, audio equipment, applied electronic toys, audio records, video records andpublished/printed matters.
58

Development Bank of Japan Research Report/ No. 9

Likewise, Figure 2-28 shows the contribution of information-related prices24 to the year-onyear change in corporate services. While other information-related prices rose in 1997 due to theconsumption tax hike, IT-related prices have declined almost continuously. Here again, however,the decline in IT-related prices has been slowing down recently. The upturn in other informationrelated prices is related to the trend of specialized services, in which personnel cost accounts fora substantial part.
Figure 2-28. Contribution of Information-related Prices on Year-on-Year Change in
Corporate Service Prices
(%)
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
96

97

Others

Note:
Source:Other information-related

98

99

IT-related

00(CY quarterly basis)

Corporate service prices

The contribution of “others” is calculated as residual.
Bank of Japan, “Price Indexes Monthly.”

24 The weight of information-related prices in corporate service prices (1995 as base year) is 32.2%. “IT related” services (with aweight of 19.1%) include software development, data-processing, domestic and international telecommunications, mobile
communication, access charges and finance/insurance. “Other information-related” services (13.1%) include postal services,
information services, market research, specialized services (law, accounting, civil engineering/construction, etc.) andbroadcasting.
Development Bank of Japan Research Report/ No.959

In contrast, the contribution of information-related prices25 to the decline in consumer
prices is smaller than in domestic wholesale prices or corporate service prices (Figure 2-29). The
relative price of information-related goods to total consumer prices (Figure 2-30) indicates that
IT-related prices have fallen faster than other information-related prices. Although IT-related
prices have fallen by about 10% since the first quarter of 1995, the decline has leveled off since1998.
It is increasingly argued that the trend of consumer prices does not reflect the actual
sentiment in daily life. The gap between prices and sentiment is likely to be greater for IT-related
goods because the rapid technological development frequently improves the quality of products
covered by the survey26. Moreover, the impact of new products cannot be ignored. At present,changes in product quality and new products can only be incorporated in the survey when therelevant standard is revised every five years. In view of this, the impact of IT-related prices is
considered to be greater than can be observed in the data.
Figure 2-29. Contribution of Information-related Prices on Year-on-Year Change inConsumer Prices
(%)
2.5

1.5

0.5

-0.5

-1.5
96

97

98

99

00
(CY quarterly basis)

Others

Note:
Source:Other information-related

IT-related

Consumer prices

The contribution of “others” is calculated as residual.
Management and Coordination Agency, “Consumer Price Index.”

25 The weight of information-related prices in consumer prices (1995 as base year) is 5.1%. “IT-related” consumption (with aweight of 2.1%) includes word processors, telephone sets and telephone charges. “Other information-related” consumption(3.0%) includes postal charges, TV, stereos, tape recorders, VCRs, home TV game machines, compact discs, cassette tapes, video
tapes, books/other printed matter and TV license fees.
26 The consumer price index, which was originally developed according to the international standard established by theInternational Labor Organization (ILO), typically considers the structure of household consumption as constant to identify thechanges in required costs as prices fluctuate. Therefore, it has limited ability to grasp swiftly any change in the types and amountsof goods and services purchased by households in measuring the impact of price fluctuations on the cost of living.
60

Development Bank of Japan Research Report/ No. 9

Figure 2-30. Trend of Relative Information-related Prices(95/1Q=100)
102
100
98
96
94
92
90
88
86
84
82
95

96

97

IT-related/total
Source:98

99

00(CY quarterly basis)

Other information-related/total

Management and Coordination Agency, “Consumer Price Index.”(as of August 21, 2000)[by Economic Research Group (e-mail: noarai@dbj.go.jp)]

Development Bank of Japan Research Report/ No.9

61

List of Back Numbers (Including JDB Research Report)
No.9

Recent Trends in the Japanese Economy: Information Technology and the Economy (This Issue)

No.8

Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries, June
2000

No.7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, May 2000

No.6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology and Market for
Underground Remediation, May 2000

No.5

Recent Trends in the Japanese Economy: The 1990s in Retrospect (This Issue)

No.4

Destabilized Consumption and the Post-bubble Consumer Environment, January 2000

No.3

The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations, the Debt
Burden and Other Structural Factors, January 2000

No.2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No.1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other AsianCountries, November 1999

JDB Research Report
No.96

Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August 1999

No.95

Efforts to Protect the Natural Environment in the United States and Germany: Environmental Mitigation
and Biotope Conservation, July 1999

No.94

Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999

No.93

Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO sector
through comparison with Germany, June 1999

No.92

The Impact of Demographic Changes on Consumption and Savings, March 1999

No.91

Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March 1999

No.90

Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999

No.89

Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between Japanand the U.S., December 1998

No.88

Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998

No.87

Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998

No.86

Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998

No.85

Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998

No.84

R&D Stock and Trade Structure in Japan, August 1998

No.83

Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998

No.82

The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public Acceptance isEssential, May 1998

No.81

The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997 and 1998
Conducted in August 1997, March 1998

No.80

Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998

No.79

Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January 1998

No.78

Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series andEnvironmental Cost, January 1998

No.77

Current Conditions and Issues of Computerization in the Health Care Industry : For the Construction of a
Health Care Information Network, January 1998

No.76

Household Consumption and Saving in Japan, December 1997

No.75

The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to Support
Diverse Consumer Choices, November 1997

No.74

Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on International Trade,
October 1997

No.73

The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on the Effects
on Productivity and Employment, October 1997

No.72

An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997

No.71

Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of Economic
Recovery, August 1997

No. 70 Corporate Fundraising : An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm Date fromJapan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March 1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulation of theElectric Power Industry in Japan and Implication of Experiences in the United States, December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key, October
1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of the Current
Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the UnitedStates and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY 1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and 1996
Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996
No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995 and 1996
Conducted in August 1995, October 1995

No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October 1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October 1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY 1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part2, July 1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery Industry,
June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and 1995
Conducted in March 1995, June 1995
No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March 1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private Level, May
1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994 and 1995
Conducted in August 1994 , November 1994
No. 40 Selected Summaries of Research Reports Published in FY 1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and 1994
Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration, December
1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993
No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993 and 1994
Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and 1993
Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992 and 1993
Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and 1992
Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992
No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s, February 1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991 and 1992
Conducted in August 1991, September 1991

No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and 1991
Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990 and 1991
Conducted in August1990,September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment andTechnology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and 1990
Conducted in February 1990, March 1990
No. 18 Petrochemicals In Japan, The US, and Korea an Assessment of Economic Efficiency, February 1990
No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989 and 1990
Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly Industrializing
Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years 1988 and1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988 and 1989
Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and ASEANCountries, June 1988
No. 9

Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987