Industry-Level Competitiveness, Productivity, and Effective Exchange Rates in East Asia
In this paper, we investigate export competitiveness based on unit labor costs (ULCs) and nominal effective exchange rates (NEERs) for Japan, China, and Korea for the 12 two-digit manufacturing industries for the period 2001-2009. Japan's ULCs either are relatively stable or declining in most industries, while that of Korea shows an upward trend in many industries, with the electrical and optical equipment industry being a major exception. China's ULCs are declining in most industries. Evaluating ULCs on a foreign currency basis, Japan's ULCs increased rapidly during the period of yen appreciation, suggesting that its cost reduction efforts were more than offset by the appreciation of the yen. The results of our empirical analysis suggest that both increases in ULCs and appreciation of the home currency reduce exports by raising the home country's relative prices. The negative impact of ULCs is largest for China, while it is negligible for Japan. However, the negative impact of NEERs is largest for Japan. Moreover, the negative impact of ULCs tends to be larger for machinery-related industries, suggesting that cost competitiveness is particularly important in these industries.
|Date of creation:||Nov 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rieti.go.jp/
More information through EDIRC
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.:
- Willem Thorbecke & Atsuyuki Kato, 2011.
"The Effect of Exchange Rate Changes on Japanese Consumption Exports,"
Trade Working Papers
23238, East Asian Bureau of Economic Research.
- Thorbecke, Willem & Kato, Atsuyuki, 2011. "The Effect of Exchange Rate Changes on Japanese Consumption Exports," ADBI Working Papers 298, Asian Development Bank Institute.
- Willem Thorbecke & Atsuyuki Kato, 2011. "The Effect of Exchange Rate Changes on Japanese Consumption Exports," Macroeconomics Working Papers 23238, East Asian Bureau of Economic Research.
- THORBECKE, Willem & KATO Atsuyuki, 2012. "The Effect of Exchange Rate Changes on Germany's Exports," Discussion papers 12081, Research Institute of Economy, Trade and Industry (RIETI).
- SATO Kiyotaka & SHIMIZU Junko & Nagendra SHRESTHA & Shajuan ZHANG, 2012. "Industry-specific Real Effective Exchange Rates for Japan," Discussion papers 12044, Research Institute of Economy, Trade and Industry (RIETI).
- Rauch, James E., 1999.
"Networks versus markets in international trade,"
Journal of International Economics,
Elsevier, vol. 48(1), pages 7-35, June.
- Engel, C., 1996.
"Accounting for U.S. Real Exchange Rate Changes,"
Discussion Papers in Economics at the University of Washington
96-02, Department of Economics at the University of Washington.
- Janet Ceglowski & Stephen Golub, 2011. "Does China Still Have a Labor Cost Advantage?," CESifo Working Paper Series 3579, CESifo Group Munich.
- Dekle, Robert & Fukao, Kyoji, 2009.
"The Japan-U.S. Exchange Rate, Productivity, and the Competitiveness of Japanese Industries,"
CEI Working Paper Series
2008-25, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Robert Dekle & Kyoji Fukao, 2009. "The Japan-U.S. Exchange Rate, Productivity, and the Competitiveness of Japanese Industries," Global COE Hi-Stat Discussion Paper Series gd08-047, Institute of Economic Research, Hitotsubashi University.
When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:13094. 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 references are entirely missing, you can add them using this form.