This chapter examines the divergent technological change in the Japanese and the United States (U.S.) economies, demonstrating that improving factor productivity efficiency is essential for Japan. To ensure methodological consistency with the authors’ prior research on the period from 1960 to 2004, the authors first re-estimate growth rates for this period using a new dataset. By providing updated insights into long-term growth dynamics based on the latest measurement standards and presenting a consistent analytical framework that bridges historical and contemporary growth analysis, this study contributes to a deeper understanding of recent economic trends. The primary focus of this study is the period from 1980 to 2020, marked by significant structural changes, including globalization, techno-logical advancements, and demographic shifts. The findings underscore Japan’s need to enhance both capital and labor efficiency, particularly in the context of population decline. This study also emphasizes the robust stability of the U.S. economy while addressing the belatedness in Japan’s stability.