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Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports

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  • Baak, SaangJoon

Abstract

The purpose of this paper is to examine whether and to what extent Chinese and Korean products in the machinery industry compete with each other in the Japanese market. Empirical tests of panel data of 16 machinery products from 2000Q1 to 2012Q2 show that a decrease in the unit prices of Chinese exports leads to a decrease in the demand for Korean exports. In contrast, a decrease in the unit prices of Korean exports does not lead to a decrease in the demand for Chinese exports. In addition, lagged Chinese prices have bigger impacts on current Korean prices than lagged Korean prices on current Chinese prices. Simulation experiments investigating the impacts of a change in exchange rates on the Chinese and Korean export volumes also confirm that the Korean variables do not affect the Chinese export volume as much as the Chinese variables affect the Korean export volume. Overall, the findings in the present paper indicate that China has already emerged as a formidable competitor to Korea in the Japanese machinery market.

Suggested Citation

  • Baak, SaangJoon, 2014. "Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 256-271.
  • Handle: RePEc:eee:jjieco:v:34:y:2014:i:c:p:256-271
    DOI: 10.1016/j.jjie.2014.09.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Willem THORBECKE, 2016. "Understanding the Flow of Electronic Parts and Components in East Asia," Discussion papers 16072, Research Institute of Economy, Trade and Industry (RIETI).
    2. Willem Thorbecke, 2015. "Understanding Japan's Capital Goods Exports," The Japanese Economic Review, Japanese Economic Association, vol. 66(4), pages 536-549, December.
    3. repec:eee:japwor:v:44:y:2017:i:c:p:26-34 is not listed on IDEAS
    4. Thorbecke, Willem, 2017. "How Would a Slowdown in the People’s Republic of China Affect its Trading Partners?," ADBI Working Papers 634, Asian Development Bank Institute.
    5. repec:eee:asieco:v:55:y:2018:i:c:p:58-70 is not listed on IDEAS
    6. Thorbecke, Willem, 2017. "Investigating Imbalances in Manufacturing Trade," RIEI Working Papers 2017-07, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.

    More about this item

    Keywords

    Panel data; Simultaneous equations; Cross-price elasticity; Chinese exports; Korean exports;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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