This paper underlines the idea of endogenous growth theory that new or higher quality products have significant impacts on productivity and economic growth. Different with previous studies, this paper uses a quite comprehensive definition of variety, which distinguishes the country of origin of the products. | VNU Journal of Science, Economics and Business 28 (2010) 47‐59 Impact of export variety on productivity in Japan Nguyen Anh Thu* Faculty of International Business and Economics, University of Economics and Business, Vietnam National University, Hanoi, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam Received on 5 September 2010 Abstract. This paper underlines the idea of endogenous growth theory that new or higher quality products have significant impacts on productivity and economic growth. Different with previous studies, this paper uses a quite comprehensive definition of variety, which distinguishes the country of origin of the products. With disaggregated level of export data of Japan from 1980 to 2000, the empirical results suggest that nearly half of the industries studied have positive and significant relationship between varieties and Total Factor Productivity (TFP). Most of the industries, which show the positive and significant relationship between export variety and TFP, are secondary industries. This conclusion may bring an implication for Japan to produce more differentiated products to help increase its TFP. 1. Introduction The Concept stagnation. Product variety of Japan had also changed in a sophisticated way during this period. Since the mid-1980s, specialization and the expansion of foreign direct investment became trends in the Japan’s economy, which might reduce the range of exported products. However, solid developments of Japan’s economy might have the opposite effect on variety. In the stagnation period, we expect that product varieties might decrease because of the slow-down of production. Also the conclusion of many bilateral trade agreements in this period might affect Japan’s trade composition as well as its varieties (Parsons, 2000 and Greaney, 1998). This paper will address an interesting question: What role did product variety play in all these ups and downs of Japanese economy? The paper will study the impact of export variety of Japan .
