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Why Has the Border Effect in the Japanese Machinery Sectors Declined? The Role of Business Networks in East Asian-Machinery Trade

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  • Kyoji Fukao
  • Toshihiro Okubo

Abstract

This paper analyzes the causes of the decline in Japan's border effect in four machinery industries (electrical, general, precision, and transportation machinery) by estimating gravity equations for Japan's international and interregional trade. In the estimation, we explicitly take account of firms' networks. We find that ownership relations usually enhance trade between two regions (countries); moreover, we find that we can explain 35% of the decline in Japan's border effect from 1980 to 1995 in the electrical machinery industry by the increase of international networks.

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File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2007/pdf/D07-238.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d07-238.

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Date of creation: Feb 2008
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Handle: RePEc:hst:hstdps:d07-238

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Keywords: Gravity Model; Border Effect; Networks; Fragmentation;

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  1. Okubo, Toshihiro, 2004. "The border effect in the Japanese market: A Gravity Model analysis," Journal of the Japanese and International Economies, Elsevier, vol. 18(1), pages 1-11, March.
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  15. Ahn, Sanghoon & Fukao, Kyoji & Ito, Keiko, 2009. "The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia," CEI Working Paper Series 2008-27, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
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Cited by:
  1. Toshihiro Okubo & Fukunari Kimura & Nozomu Teshima, 2014. "Asian Fragmentation in the Global Financial Crisis," CAMA Working Papers 2014-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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