TITLE:
Relation between Total Factor Productivity and Utility
AUTHORS:
Katsushi Mizuno, Takumu Doi, Shio Ando, Jun Omata, Go Igusa
KEYWORDS:
Japan’s Forestry Industry, System-Wide Approach, Domestic Wood
JOURNAL NAME:
Journal of Human Resource and Sustainability Studies,
Vol.4 No.2,
June
30,
2016
ABSTRACT: First, we identified the issues facing Japan’s forestry industry by analyzing statistical data. Japan’s
forestry industry was in crisis. Despite the large increase in capital stock in forestry over the past
40 years, the production value had declined substantially, which deviated from economic common
sense. Next, we used the total factor productivity measurement theory developed by the authors to
measure the impact of technical progress on changes in the production value of Japan’s forestry
products. The results revealed virtually no evidence that technical progress contributed to any
increase in production. In addition, to investigate the causes for the decline in the production
value, we measured the cardinal utility of domestic forestry by combining the theory developed by
the authors with the system-wide approach of the economist H. Theil. This demonstrated that domestic
wood (timber) had a poor reputation. This persistently poor reputation was considered to
be the reason for the continuing low incentives for increasing production. Finally, we used economic
theory to find a unique method to explain ways to increase forestry production in Japan by
improving the reputation of domestic wood.