Analysis on Bioeconomy's Contribution to GDP: Evidence from Japan

This study analyzes seven bioeconomy sectors with the aim of establishing the leading contributing sectors to gross domestic product (GDP), and also determines the future relationship between bioeconomy and the national economy in Japan. We use data from World Input-Output Database (WIOD), International Renewable Energy Agency (IRENA), and the World Bank Group for this analysis. First, we use principal component analysis (PCA) techniques to identify the bioeconomy sectors that contribute significantly to the national economy. We find through the PCA that all the bioeconomy sectors that we analyzed contribute almost uniformly and significantly to the national economy. We also find forestry and wood sectors to be the most significant contributing bioeconomy sectors. We use the autoregressive distributed lag (ARDL) bounds test to prove the existence of short-run and long-run relationships between bioeconomy and gross domestic product (GDP). We finally use the vector error correction Granger causality model to establish a bicausality between bioeconomy and GDP in the long-run, but not in the short-run.