consecutive years, led by the finance and shipping industries. however, among manufacturers, firms in the automobile and steel industries in particular, earnings decreased for the first time in four years, mainly due to the slowdown in china and other overseas economies and to intensified price competition. japan's trade balance deficit continued in october, making it the fourth consecutive month ; consequently, the nominal gdp growth rate for the julyseptember quarter remained low at a 0. 5 percent quarterly increase. however, many listed firms have been conducting business portfolio restructuring that strengthens the earning power of core businesses. i am closely monitoring the progress in this restructuring, and hope that its benefits will spill over to small firms. japan's economy is expected to head toward a growth path, albeit at a moderate pace, mainly led by growth - oriented large, medium - sized, and small firms. the bank will gradually adjust its monetary policy accordingly. in response, small firms will need to move away from closed innovation, which relies on in - house expertise, and hasten structural reforms to step up the scale of their businesses, in order to reinforce the management resources necessary for growth - oriented business development. from this perspective, i am also paying attention to developments that feed into greater earning power, such as those in business fixed investment and exports, as well as mergers and acquisitions ( m & as ) and third - party business succession ( chart 10 ). b. improving the dynamism of firms and employment to make industries highly profitable if firms improve their capacity for innovation to make japan's industrial structure highly profitable and enhance export competitiveness, these firms will be able to capture growth in overseas markets to a greater extent. this, in turn, will generate sustainable demand for business fixed investment in japan and promote industrial clusters. such moves are expected to spill over across small and medium - sized firms. research and development ( r & d ) expenses - - which are critical in terms of boosting the declining international competitiveness i mentioned earlier - - were sluggish, amounting to 200. 7 billion u. s. dollars in japan in 2022, reflecting stagnation in its economic growth. in comparison, r & d expenses for the united states and china increased in line with their economic growth, standing at 923. 2 billion u. s. dollars and 811. 8 billion dollars, respectively. one reason for this sluggishness in japan's r & d expenses is that, due to

a higher rate, ( 3 ) whether progress is made in stepping up business fixed investment as well as wages and bonus payments, ( 4 ) whether more small firms are making virtuous wage hikes, ( 5 ) whether households'thriftiness has improved, and ( 6 ) whether japan's exports have become more competitive. i will return to these points later, along with a discussion of the structural issues facing japan. iii. toward sustainable economic growth that overcomes structural issues i would now like to share my personal views from a medium - to long - term perspective on the " dynamism " of firms, employment, and households needed to achieve sustainable growth in japan's economy, which is facing structural issues. a. improving japanese firms'earning power and capacity for raising wages as discussed so far, employment was prioritized over wages in japan. this hindered business metabolism, generated delays in productivity gains, and led to stagnant wages. following the 2008 global financial crisis, many large firms shifted the focus of their management from reforming their cost structures to restructuring their business portfolios, thereby strengthening earning power. to secure human capital, 2 i think large and medium - sized firms that have boosted productivity will strengthen their mid - career hiring by offering higher wages than those of existing employees, and they will continue to raise wages at high rates to bridge the gap between the wages of existing employees and wages formed in the labor market. labor shortages among large firms spur the movement of labor from small firms to large firms, creating employment dynamism ( chart 7 ). developments in the following components of nominal wage growth show positive signs : the inflation rate ( maintenance of living standards ), the labor productivity growth rate ( fruits of productivity gains ), and changes in labor share ( capacity for raising wages ) ( chart 8 ). nonetheless, i believe that the benefits of restructuring at large firms have not yet sufficiently spilled over to small and medium - sized firms. according to the financial statements statistics of corporations by industry, annually, for fiscal 2023, operating profits per employee among medium - sized firms was around 40 percent of that of large firms, and only around 10 percent among small firms ( micro firms " human capital " is a term coined to express the idea that human resources are valuable for corporate management. excluded ). personnel expenses per employee among medium - sized firms was around 70 percent of that of large firms, and around half among small firms ( micro firms excluded ). in terms of