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Trade Patterns in Japan's Machinery Sector

Author

Listed:
  • Hitoshi Sasaki

    (Bank of Japan)

  • Yuko Koga

    (Bank of Japan)

Abstract

This paper analyzes trade patterns in Japan's machinery sector using disaggregated data of export and import commodities. It is found that the vertical intra-industry trade--the two-way trade of products differentiated by quality--with Asian countries expanded in the 1990s. According to the results of the empirical study, this trade pattern is closely related to differences in the capital/labor ratio between Japan and its trading partners, and to Japan's foreign direct investments. It suggests that the development of Japan's trade in the machinery sector in the 1990s is explained by traditional trade theory, i.e., that trade patterns depend on the difference in factor endowment between trading partners. Japan's foreign direct investment, too, has played an important role.

Suggested Citation

  • Hitoshi Sasaki & Yuko Koga, 2005. "Trade Patterns in Japan's Machinery Sector," Bank of Japan Working Paper Series 05-E-15, Bank of Japan.
    • Handle: RePEc:boj:bojwps:05-e-15
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Vertical intra-industry trade; Foreign direct investment; Asia;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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