A Comparative Study Of Transnational TFP From The Perspective Of Human Capital Improvement

Asia’s economic development presents the Flying Geese Model, which isJapan as a leader in 1950s and 1960s, then the Four Little Dragons of Asia become the middle echelon, and later China and India as members of the BRICS countries become a follow-up force to support economic development in Asia.Paul R. Krugman has questioned the economic development model of East Asia, he believed that this model would follow the same old disastrous roadof the Soviet Union, and pointed that the economic development were driven by investment of the capital and labor force, not the improvement of the total factor productivity. The questions which will explore in this paper are also based on Paul’s ideas. In general, Japan has developed to be a matureeconomy, but it is also facing the problem of economic stagnation while economies like South Korea, their economy is in its heyday and will face unpredictable problems. On the other hand, the shortcomings and problemsexposed by the fast-growing developing countries such as China are increasing. What is the economic driving forceof the Asia Flying Geese Model? Has the TFP been improved?What is the the TFP’s driving force provived by humancapital? Based on these questions, This article will explore the law of economic development in Japan, South Korea and China by applying related theories and experiments.TFP is not only the important factor of economic development, but also the important topic of economic growth in economists’discussion. For the East Asian countries, material capital and labor force play important roles in economic take-off stage. However, with the development of aging society and the diminution of demographic dividend, these problems will lead to the loss of energy in factor-driven economies. Did the Japan’s Lost Decade Economy result from diminution of the demographic dividend and the stagnation of TFP growth? This paper intends to discuss and answer the question. This study has found that both Japan and South Korea have experienced a Total Factor Productivity Benefits period. South Korea is currently still in the stage, and Japan has end it in the 1990s. The Total Factor Productivity Benefits have helped Japan and South Korea pull through the period of Middle Income Trap and enter the ranks of high-income countries. China has not yet appeared such kind of Total Factor Productivity Benefits period. Japan and South Korea’s skilled labor productivity is much higher than China. China’s low production capacity reduces the rate of diffusion of technology, therefore, resulting in lower total factor productivity. Japan needs to stimulate the human capital from the microscopic point of view. Korea needs to improve the quality of human capital to further the extension of Total Factor Productivity Benefits period. It is time for China to turn unskilled labor force or low skilled one into productivity before they are becoming old. In addition, it also need enhance their skills labor in order to stimulate TFP improvement and sustain economic growth.