Political conflicts among trading partners have changed their forms with ever-increasing flows of foreign direct investment. A decrease in the exports of Japan might merely be a reflection of a global production shift by Japanese multinational corporations. We investigate the effect of Japanese trade on the exports of other countries to the United States in the 1990s. In our sample we include eight Asian countries besides the US and Japan. With the trade data disaggregated at the HS 4-digit level, we regress the exports of an Asian country to the US on the Japanese exports to the US and the third-country, and the Japanese FDI to a third-country in a panel data specification. Among eight countries investigated, we find the evidence that Chinese and Japanese exports are substitutes in the US market while the exports of China to the US are partly promoted by Japanese FDI to China. The estimation result confirms a view that China competes vigorously with Japan in the US market while Japanese multinationals are adjusting their production bases to China in a process of reforming a new global production network.
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Paper provided by Kyushu Sangyo University, Faculty of Economics in its series Discussion Papers with number
18.
Length: 32 pages Date of creation: Oct 2004 Date of revision: Publication status: Published in Asia Pacific Business Review, 2006, 12(3), pages 285-307 Handle: RePEc:kyu:dpaper:18
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Hal Hill & Prema-chandra Athukorala, 1998.
"Foreign Investment in East Asia: A Survey,"
Asian-Pacific Economic Literature,
2004 Asia Pacific School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd, vol. 12(2), pages 23-50, November.
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