The Japanese work ethic would persist, the reasoning went, and Japan’s high savings rate and slow population growth would give it a substantial edge in capital intensity – and thus in labor productivity – on top of whatever economy-wide advantage it might develop in total factor productivity. Moreover, proximity to a vast pool of low-wage workers would allow Japan to construct a regional division of labor that took full advantage of its high-paid, well-educated workforce and outsourced low-skill, low-wage, and hence low-productivity jobs to continental Asia.