An increase in aging capital stock and delays in the introduction of new technology contributes to a sluggish rise in total factor productivity (TFP). 5 Since the bursting of the asset bubble in the early 1990s, Japanese firms have reined in fixed investment as they have been burdened with excess production capacity and excess debt, with the banking sector tightening their lending attitudes.
Since then, business fixed investment has been contained within the scope of depreciation expenses over the years. As a consequence, aging capital stock has increased and the introduction of new technology has tended to be delayed (Chart 4). 2.