--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-33/can-intangible-investments-ease-declining-rates-of-return-on-capital-in-japan/" title: "Can Intangible Investments Ease Declining Rates of Return on Capital in Japan?" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:42:38+00:00" date_modified: "2026-07-13T07:42:38+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2017" ipm_keyword: - "capital accumulation" - "human resources" - "intangible capital" - "IT" - "Japan" - "JIP database" - "productivity" - "R&D" - "rate of return" - "RIETI" - "TFP" ipm_research_theme: - "Technology and innovation" ipm_country_focus: - "Japan" - "Korea" - "United States" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # Can Intangible Investments Ease Declining Rates of Return on Capital in Japan? Canonical URL: https://csls.ca/ipm-archive/ipm-issue-33/can-intangible-investments-ease-declining-rates-of-return-on-capital-in-japan/ # Can Intangible Investments Ease Declining Rates of Return on Capital in Japan? [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-33-7-Miyagawa-Takizawa-Tonogi.pdf) Cite this article × Cite this article as: Miyagawa, Tsutomu, Miho Takizawa, and Konomi Tonogi. 2017. “Can Intangible Investments Ease Declining Rates of Return on Capital in Japan?” International Productivity Monitor, No. 33 (Fall 2017): 114–127. https://www.csls.ca/ipm-archive/ipm-issue-33/can-intangible-investments-ease-declining-rates-of-return-on-capital-in-japan/ ## Authors: - Tsutomu Miyagawa Gakushuin University / RIETI - Miho Takizawa Toyo University - Konomi Tonogi Rissho University ## IPM Issue 33 Fall 2017 pp. 114–127 ## Related IPM articles [Efficiency Adjustment of Hours Worked: Two Possible Modifications of a Jorgensen Production Model Barbara Fraumeni Fall 2025 | IPM Issue 49 | pp. 103–115](https://csls.ca/ipm-archive/ipm-issue-49/efficiency-adjustment-of-hours-worked-two-possible-modifications-of-a-jorgensen-production-model/) [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [Adult Skills and Productivity: New Evidence from PIAAC 2023 Dan Andrews, Balázs Égert, Christine de La Maisonneuve Fall 2025 | IPM Issue 49 | pp. 41–63](https://csls.ca/ipm-archive/ipm-issue-49/adult-skills-and-productivity-new-evidence-from-piaac-2023/) [The Potential Impact of Pro-competitive Regulatory Reforms on Productivity and Growth in Canada Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 3–40](https://csls.ca/ipm-archive/ipm-issue-49/the-potential-impact-of-pro-competitive-regulatory-reforms-on-productivity-and-growth-in-canada/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [Appendix: UK Productivity Growth Rates Across Data Vintages and Studies Josh Martin Spring 2025 | IPM Issue 48 | pp. 65–73](https://csls.ca/ipm-archive/ipm-issue-48/appendix-uk-productivity-growth-rates-across-data-vintages-and-studies/) [The UK Productivity Slowdown: A Review of Timing, Magnitude, and Drivers Josh Martin Spring 2025 | IPM Issue 48 | pp. 1–34](https://csls.ca/ipm-archive/ipm-issue-48/the-uk-productivity-slowdown-a-review-of-timing-magnitude-and-drivers/) [Opportunities and Risks of Artificial Intelligence for Productivity Francesco Filippucci, Peter Gal, Katharina Laengle, Matthias Schief, Filiz Unsal Spring 2025 | IPM Issue 48 | pp. 1–26](https://csls.ca/ipm-archive/ipm-issue-48/opportunities-and-risks-of-artificial-intelligence-for-productivity/) [Using Ecosystem Accounting to Integrate the Environment in Measures of Multifactor Productivity Carl Obst Fall 2024 | IPM Issue 47 | pp. 87–108](https://csls.ca/ipm-archive/ipm-issue-47/using-ecosystem-accounting-to-integrate-the-environment-in-measures-of-multifactor-productivity/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn Japan’s economic growth has slowed since the collapse of the bubble economy in the 1990s due to low capital accumulation. We focus on the low rate of return on capital, which led to this slow capital accumulation, finding that it was caused by an increase in the capitaloutput ratio and low capital share. Not only has the rate of return on capital declined, but its variance across industries has increased, as has the number of industries with negative rates of return. We estimate a profit function in which the profit rate is explained not only by the real wage but also by intangibles. The estimation results show that investment in human resources increases the profit rate and that intangibles contribute to this increase through productivity improvement, especially in the IT industry. Our study implies that governments should implement a comprehensive innovation policy that stimulates investments not only in R&D, but also in IT and human resources. Many advanced countries have suffered slow La croissance économique du Japon a ralenti depuis l’effondrement de l’économie de bulle dans les années 1990 en raison d’une faible accumulation de capital. Nous nous concentrons sur le faible taux de rendement du capital, qui a conduit à cette lente accumulation de capital, constatant qu’il était causé par une augmentation du ratio capital-production et une faible part du capital. Non seulement le taux de rendement du capital a diminué, mais sa variance entre les industries a augmenté, tout comme le nombre d’industries affichant des taux de rendement négatifs. Nous estimons une fonction de profit dans laquelle le taux de profit est expliqué non seulement par le salaire réel mais aussi par les actifs immatériels. Les résultats de l’estimation montrent que l’investissement dans les ressources humaines augmente le taux de profit et que les actifs immatériels contribuent à cette hausse grâce à l’amélioration de la productivité. 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