The Economic lmplications of Knowledge-Capital Accumulation to Japanese Industry Output

Abstract

Reviewing the experiences of Japan, this paper analyzes factors that determine and shape the output generation. This article seeks to apply the Cobb Douglas production function, which is to analyze the contribution of each input in a set of combined factor inputs, by examining which factor input amongst research activities, labor or capital has a larger influence on output. The dynamic of output is measured in integrated factors, and the progress in understanding the output source will improve the computation of Cobb Douglas production function, which is the objective of this study. Data obtained from Research Institute of Economy, Trade and Industry (RIETI) Japan Industrial Productivity OIP) Database 2011 and Japan Statistics Official in the period of 1970 to 2008 are used to test the hypotheses. Multiple regression method was conducted. The findings of this study provide substantial lessons for Indonesia, particularly with regards to the improvement of the industrial policy regarding innovation and technology.