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Why Japan lost its comparative advantage in producing electronic parts and components

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  • Thorbecke, Willem

Abstract

Japanese electronic parts and components (ep&c) exports fell in value during and after the Global Financial Crisis (GFC) while Taiwan and South Korea's ep&c exports soared. This paper reports that the yen appreciation between 2007 and 2011 reduced yen ep&c export prices by 28%. The results also indicate that yen appreciations led to small declines in ep&c export volumes and, together with NT dollar depreciations, to large decreases in Japanese semiconductor stock prices. The strong yen caused yen export prices during and after the GFC to tumble relative to yen production costs, decimating profits. Plummeting profits in turn hindered Japanese ep&c firms from investing enough in capital and innovation to compete with nimble rivals.

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  • Thorbecke, Willem, 2019. "Why Japan lost its comparative advantage in producing electronic parts and components," Journal of the Japanese and International Economies, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:jjieco:v:54:y:2019:i:c:s0889158319300413
    DOI: 10.1016/j.jjie.2019.101050
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    Cited by:

    1. Kawasaki, Kentaro & Sato, Kiyotaka, 2021. "A new assessment of economic integration in East Asia: Application of an industry-specific G-PPP model," Japan and the World Economy, Elsevier, vol. 60(C).
    2. Willem THORBECKE, 2021. "East Asian and European Firms: Comrades or Competitors," Discussion papers 21098, Research Institute of Economy, Trade and Industry (RIETI).
    3. Willem THORBECKE & Nimesh SALIKE & CHEN Chen, 2020. "Product Complexity, Exports, and Exchange Rates: Evidence from the Japanese Chemical Industry," Discussion papers 20085, Research Institute of Economy, Trade and Industry (RIETI).
    4. Willem Thorbecke, 2021. "The Exposure of French and South Korean Firm Stock Returns to Exchange Rates and the COVID-19 Pandemic," JRFM, MDPI, vol. 14(4), pages 1-29, April.
    5. Kovács, Olivér, 2022. "Inkluzív kormányzás az ipar 4.0 korában - Japán példája [Inclusive governance in the age of Industry 4.0 - The example of Japan]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 255-277.
    6. Wickes, Ron, 2021. "Trade deficits and trade conflict: The United States and Japan," Japan and the World Economy, Elsevier, vol. 60(C).
    7. Willem THORBECKE, 2021. "The Exposure of French and South Korean Firms to Exchange Rates and the COVID-19 Pandemic: Evidence from the Stock Market," Discussion papers 21017, Research Institute of Economy, Trade and Industry (RIETI).
    8. Kim, Yong Jin & Lee, Duk Hee, 2020. "Technology convergence networks for flexible display application: A comparative analysis of latecomers and leaders," Japan and the World Economy, Elsevier, vol. 55(C).
    9. Willem THORBECKE, 2020. "How the Coronavirus Crisis is Affecting the Korean Economy: Evidence from the Stock Market," Discussion papers 20088, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Electronic parts and components; Exchange rate pass-through; Exchange rate elasticities;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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