IDEAS home Printed from https://ideas.repec.org/p/csg/ajrcau/375.html
   My bibliography  Save this paper

Will New Trends in Foreign Direct Investment Change the Structure of Intra-industry Trade between China and Japan?

Author

Listed:
  • Tao Tao

Abstract

It is generally believed that Japan's cost-oriented and export-oriented direct invest­ment has introduced a bilateral intra-industry trade pattern in China–Japan trade through which China imports accessories from Japan, processes them and exports the product to Japan. Based on investment and trade data in the machinery sector, this paper discusses whether Japan's market-oriented investment in China since 2000 has changed the structure of the trade between two countries. We conclude that the vertical division of labour, as described by the ‘flying-geese’ model and applied to the machinery industry, is gradually disappearing. In its place, no stereotypical East Asian vertical division of labour has been formed in transport machinery industry, despite it being the sector into which investment has grown fastest since 2000. Rather, factor endowment is the main determinant of intra-industry trade in the machinery industry between the two countries.

Suggested Citation

  • Tao Tao, 2008. "Will New Trends in Foreign Direct Investment Change the Structure of Intra-industry Trade between China and Japan?," Asia Pacific Economic Papers 375, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:csg:ajrcau:375
    as

    Download full text from publisher

    File URL: https://crawford.anu.edu.au/pdf/pep/apep-375.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical intra-industry trade and foreign direct investment in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 468-506, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Masahiro Kawai, 2014. "Asian Monetary Integration : A Japanese Perspective," Governance Working Papers 24158, East Asian Bureau of Economic Research.
    2. Meenu Tewari & C. Veeramani, 2016. "Network Trade and Development: What Do Patterns of Vertically Specialized Trade in ASEAN Tell Us About India’s Place in Asian Production Networks?," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 16(2), pages 349-388, June.
    3. Kearney, Colm & Muckley, Cal, 2008. "Can the traditional Asian US dollar peg exchange rate regime be extended to include the Japanese yen?," International Review of Financial Analysis, Elsevier, vol. 17(5), pages 870-885, December.
    4. Hiroyuki Hino & Atsushi Iimi, 2008. "Aid Effectiveness Revisited: Comparative Studies of Modalities of Aid to Asia and Africa," Discussion Paper Series 218, Research Institute for Economics & Business Administration, Kobe University.
    5. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-158, March.
    6. J. Hanna & L. L鶩 & S. Petit, 2015. "Intra-tourism trade, income distribution and tourism endowment: an econometric investigation," Applied Economics, Taylor & Francis Journals, vol. 47(21), pages 2184-2200, May.
    7. Oukhallou, Youssef, 2019. "Military Expenditure and Economic Development," MPRA Paper 98352, University Library of Munich, Germany.
    8. Obashi, Ayako, 2010. "Stability of production networks in East Asia: Duration and survival of trade," Japan and the World Economy, Elsevier, vol. 22(1), pages 21-30, January.
    9. Harald Badinger & Peter Egger, 2010. "Horizontal vs. Vertical Interdependence in Multinational Activity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(6), pages 744-768, December.
    10. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    11. Miguel Angel Esquivias Padilla, & Dyah Wulan Sari, & Rossanto Dwi Handoyo, 2017. "Formation of production networks in ASEAN: Measuring the real value-added and identifying the role of ASEAN countries in the world supply chains," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(2), pages 237-255, May.
    12. Tadashi Ito & Toshihiro Okubo, 2012. "New Aspects of Intra-industry Trade in EU Countries," The World Economy, Wiley Blackwell, vol. 35(9), pages 1126-1138, September.
    13. Mariam Camarero & Cecilio Tamarit, 2003. "Estimating exports and imports demand for Manufactured goods: The role of FDI," European Economy Group Working Papers 22, European Economy Group.
    14. Keiko Ito & Kyoji Fukao, 2005. "Physical and Human Capital Deepening and New Trade Patterns in Japan," NBER Chapters, in: International Trade in East Asia, pages 7-52, National Bureau of Economic Research, Inc.
    15. Misa OKABE, 2015. "Impact of Free Trade Agreements on Trade in East Asia," Working Papers DP-2015-01, Economic Research Institute for ASEAN and East Asia (ERIA).
    16. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    17. Henryk Gurgul & Lukasz Lach, 2016. "Comparative advantage of the EU in global value chains: How important and efficient are new EU members in transition?," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 17(1), pages 21-58.
    18. Ansgar Belke & Ulrich Volz, 2020. "The Yen Exchange Rate and the Hollowing Out of the Japanese Industry," Open Economies Review, Springer, vol. 31(2), pages 371-406, April.
    19. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
    20. Yushi Yoshida & Hiro Ito, 2006. "How Do the Asian Economies Compete With Japan in the US Market? Is China Exceptional? A Triangular Trade Approach," Asia Pacific Business Review, Taylor & Francis Journals, vol. 12(3), pages 285-307, July.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csg:ajrcau:375. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akira Kinefuchi (email available below). General contact details of provider: https://edirc.repec.org/data/ajrccau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.