An international comparison on TFP changes in ICT industry among Japan, Korea, Taiwan, China, and the United States

With faster growth, the total output value of China, Korea, and Taiwan seems to catching up quickly with Japan and the United States in the information and communications technology (ICT) industry during 1981-2010. This paper found that the total factor productivity (TFP) growth rate of ICT industry in the United States was much higher than that of the rest of the four countries during 1981-2010. The ICT growth of China, Korea, and Taiwan was input driven, while that of the United States and Japan was TFP driven. The TFP gap in ICT industry between the United States and the rest of four countries got wider during 1995-2010. Consequently, the China Manufacturing 2025 might not pose threat to the United States under the trade war because of the wider TFP gap between China and the United States. It is suggested that the governments should encourage R&D and intellectual property right (IPR) protection in particular for avoiding trade conflict.