On the effects of trade liberalization policies on regional economies based on "Transnational Interregional Input-Output Table between China and Japan"

Rapid expansion of economies and trades in Asian countries can be accelerated by Free Trade Agreements, Economic Partnership Agreements among countries as well as development policy of each country. To foresee the effects of those agreements and policies on trades and logistics, a sophisticated data set and analytical tool are needed. This paper characterizes and analyzes the interregional trade values in Japan and China, which have not been dealt by most of the traditional country-based models, by using “Transnational Interregional Input-Output Table between China and Japan.” To ensure the consistency and operability of the model, it extends an existing general equilibrium trade model (GTAP model) and divides its Japanese and Chinese parts into eight and seven regions, respectively, using the data on the interregional input-output table. As a result, while keeping the structure of the standard model, it enables us to compute conveniently the regional changes in trade values resulted from changes in economic conditions such as a trade agreement, decrease in maritime transportation cost and regional development. This paper significantly contributes to the fields of regional trade analyses and future cargo-volume predictions, by showing the possibility of general equilibrium, regional IO-based analysis based on a published data set and a popular model.