Taken together, the results in table 12 suggest that the productivity gap and the change in R&D capital have a positive and significant effect on TFP growth in Japanese manufacturing. Interestingly, human capital appears to have no significant effect, either as a levels effect or in differences (the ratio of non-production workers to total workers is a rather imprecise measure of human capital). Furthermore, the human capital interaction term is also negative and insignificant. The interaction terms do not present a clear picture at this stage, although industries with high ratios of R&D capital to physical capital appear to catch up faster (inter4).