The role of Kaizen in economic transformation

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This report aims to understand where the Japan International Cooperation Agency’s (JICA’s) Kaizen approach to productivity enhancement fits into the broader donor approaches to productivity. It begins by looking at the three distinct levels of productivity enhancement: 1. improving productivity at the national level by allocating resources between sectors 2. productivity increases through shifts in resources from less to more productive firms 3. increasing productivity within individual firms, where the focus of the Kaizen approach is centred. Policy support for productivity can also be divided into
three different levels: policies that promote structural change, policies that help improve productivity within individual sectors, and policies that target productivity improvements at the firm level. At the structural level these include industrial policy, investment climate reforms and financial sector development. At the sectoral level, competition promotion, export diversification, the promotion of foreign direct investment and global value chains play a role. At the firm level, human resource management and innovation policy all play roles in productivity improvement.