The econometric results presented in this paper suggest that the productivity gap with the USA had a significant effect on TFP growth in Japanese manufacturing. This effect has both a direct element and a indirect element mediated by the industry interaction effects. Regression 10 suggests that the direct effect has a coefficient of around 0.038, meaning that 3.8 per cent of any productivity gap disappears each year. The indirect effects mean that industries with higher ratios of R&D capital to physical capital and higher ratios of exports to imports, catch up faster. Industries with higher ratios of non-production workers to total workers catch up more slowly. These effects can be used to estimate implied catch-up effects that vary across the industries. These estimates suggest that the highest catch-up effects occur in electricals, textiles and transport. In contrast, food and machinery do not appear to benefit from catch-up effects.