Structural Change in the USA and Japan: an Extended Input–Output Analysis

This paper examines structural change in the Japanese and US economies over the period 1958–1986. Integrating the Leontief and Ghoshian input–output systems we define inner and final structure matrices, then interpret these structures in terms of input–output multipliers. Various multipliers are calculated and compared for the USA and Japan. We then discuss several measures of total connectedness for the two economies. All these measures show a marked shift away from manufacturing and toward services in both countries. Both countries experienced decreases in the ratio of total intermediate inputs to total industry output. In general, the results confirm other studies showing a greater increase in vertical integration in the Japanese economy compared with the USA. The increasing importance and connectedness of the government sector in Japan is also apparent.