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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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Cited by:
  1. Toshihiro OKUBO & Fukunari KIMURA & Nozomu TESHIMA, 2013. "Asian Fragmentation in the Global Financial Crisis," Working Papers DP-2013-38, Economic Research Institute for ASEAN and East Asia (ERIA).

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