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Exposure to Low-wage Country Imports and the Growth of Japanese Manufacturing Plants

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  • Anna Maria MAYDA
  • NAKANE Masato
  • STEINBERG, Chad
  • YAMADA Hiroyuki

Abstract

Japan'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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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12038.

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Length: 26 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:eti:dpaper:12038

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  1. Raphael Anton Auer & Andreas M. Fischer, 2008. "The Effect of Low-Wage Import Competition on U.S. Inflationary Pressure," Working Papers 2008-18, Swiss National Bank.
  2. Álvarez, Roberto & Claro, Sebastián, 2009. "David Versus Goliath: The Impact of Chinese Competition on Developing Countries," World Development, Elsevier, vol. 37(3), pages 560-571, March.
  3. Tomiura, Eiichi, 2003. "The impact of import competition on Japanese manufacturing employment," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 118-133, June.
  4. Nicholas Bloom & Mirko Draca & John Van Reenen, 2011. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," NBER Working Papers 16717, National Bureau of Economic Research, Inc.
  5. Stefano Federico, 2012. "Industry dynamics and competition from low-wage countries: evidence on Italy," Temi di discussione (Economic working papers) 879, Bank of Italy, Economic Research and International Relations Area.
  6. Eiichi Tomiura, 2004. "Import Competition and Employment in Japan: Plant Startup, Shutdown and Product Changes," The Japanese Economic Review, Japanese Economic Association, vol. 55(2), pages 141-152.
  7. Autor, David & Dorn, David & Hanson, Gordon H., 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," IZA Discussion Papers 7150, Institute for the Study of Labor (IZA).
  8. Iacovone, Leonardo & Rauch, Ferdinand & Winters, L. Alan, 2013. "Trade as an engine of creative destruction: Mexican experience with Chinese competition," Journal of International Economics, Elsevier, vol. 89(2), pages 379-392.
  9. Matteo Bugamelli & Silvia Fabiani & Enrico Sette, . "The age of the dragon: Chinese competition and the pricing behavior of the Italian firms," Working Papers 4, Department of the Treasury, Ministry of the Economy and of Finance.
  10. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  11. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March.
  12. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
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