IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Offshoring Bias in Japan's Manufacturing Sector

  • FUKAO Kyoji
  • ARAI Sonoe

As the manufacturing sectors of developed economies increasingly outsource to developing economies, a serious measurement problem, or "offshoring bias" (Houseman et al. 2011), may arise. If a manufacturing industry or firm procures many parts and components from developing economies at exceptionally low prices, taking advantage of special supplier networks or efficient foreign affiliates as an example, and if these low prices are not correctly accounted, the productivity of this industry will be overestimated. Using Japan's I-O tables and price data for imported and domestic products, we estimate the offshoring bias by examining the differences in estimates of import use in the I-O tables based on direct data and estimates derived from the assumption that an industry's imports of each input, relative to its total demand, are the same as the economy-wide imports relative to total demand (as is assumed in the I-O tables for the United States). We also detail the types of data used and their collection method by METI. Our main findings are as follows. 1) In the period 1995-2008, the import price-domestic price ratio of many commodities, including important parts and components, declined sharply. For instance, in the case of integrated circuits and semiconductor devices, the relative prices declined by 33 % and 28 %, respectively. 2) Since the share of imported inputs in total inputs differs across sectors, we found quite large negative or positive offshoring biases in some sectors. For example, in sectors such as aircrafts, liquid crystal elements, and integrated circuits, the negative offshoring bias of intermediate input growth is more than 2.5 % and the positive offshoring bias of total factor productivity (TFP) growth is more than 1.7 %. On the other hand, in sectors such as cellular phones, radio and television sets, and other photographic and optical instruments, the positive offshoring bias of intermediate input growth is more than 3.3 % and the negative offshoring bias of TFP growth is more than 1.9 %.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.rieti.go.jp/jp/publications/dp/13e002.pdf
Download Restriction: no

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13002.

as
in new window

Length: 21 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:eti:dpaper:13002
Contact details of provider: Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
Phone: +81-3-3501-1363
Fax: +81-3-3501-8577
Web page: http://www.rieti.go.jp/
Email:


More information through EDIRC

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.:

as in new window
  1. Diewert, Erwin & Nakamura, Alice O., 2010. "Bias Due to Input Source Substitutions: Can It Be Measured?," Economics working papers erwin_diewert-2010-15, Vancouver School of Economics, revised 13 Jul 2010.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:13002. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.