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Impact of Tighter Controls on Japanese Chemical Exports to Korea

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  • Nobuhiro Hosoe

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

Abstract

The Japanese Ministry of Economy, Trade and Industry announced recently that they will terminate preferential treatment in the licensing of specific chemical products for export to South Korea. This announcement evoked concern that the impact on Korean semiconductor and electronics industries, which rely heavily on imports from Japan, might cause a serious supply shortage in the global semiconductor market. To assess the economic impact of tighter export controls, this study simulates: (a) imposition of an export tax on chemical products; and (b) a productivity decline in the electronics sector in Korea, using a world trade computable general equilibrium model. The results of these simulations indicate that such a productivity decline would cause only slight harm to the Japanese and world economies, aside from the electronics sector in Korea, and that an export tax would significantly distort trade patterns and undermine the welfare of Japan and Korea in a similar magnitude. However, welfare loss normalized for GDP size would be far smaller in Japan than in Korea.

Suggested Citation

  • Nobuhiro Hosoe, 2019. "Impact of Tighter Controls on Japanese Chemical Exports to Korea," GRIPS Discussion Papers 19-17, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:19-17
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    References listed on IDEAS

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    Cited by:

    1. Shin, Sangho & Balistreri, Edward J., 2022. "The other trade war: Quantifying the Korea–Japan trade dispute," Journal of Asian Economics, Elsevier, vol. 79(C).
    2. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Deseatnicov, Ivan, 2023. "The impact of the strengthening of export controls on Japanese exports of dual-use goods," International Economics, Elsevier, vol. 174(C), pages 160-179.
    3. Jia, Zhijie & Lin, Boqiang & Wen, Shiyan, 2022. "Electricity market Reform: The perspective of price regulation and carbon neutrality," Applied Energy, Elsevier, vol. 328(C).
    4. Natsuki Kamakura, 2022. "From globalising to regionalising to reshoring value chains? The case of Japan’s semiconductor industry [Reorienting the drivers of development: alternative paradigms]," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 15(2), pages 261-277.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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