Exposure to Low-wage Country Imports and the Growth of Japanese Manufacturing Plants
AbstractJapan's trade structure has changed remarkably in the past two decades with an increase of imports of manufactured goods from low-wage countries, in particular China. This has contributed to the impression of a hollowing out effect in manufacturing. Against this background, we analyze the role of international trade in the reallocation of Japanese manufacturing within and across industries from 1989 to 2006. We estimate the impact of industry exposure to low-wage country imports on Japanese plants' survival and employment growth. The analysis is conducted with a panel dataset of over 4.5 million observations on Japanese manufacturing plants. Our results are broadly consistent with the factor proportions model of trade, as we find that plant survival and growth are negatively associated with industry exposure to low-wage country imports.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12038.
Length: 26 pages
Date of creation: Jun 2012
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