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How do the Asian Economies Compete with Japan in the US Market, China Exceptional? A Triangular Trade Approach

  • Yushi Yoshida

    ()

    (Faculty of Economics, Kyushu Sangyo University)

  • Hiro Ito

    (Department of Economics, Portland State University)

Political conflicts among trading partners have changed their forms with ever-increasing flows of foreign direct investment. A decrease in the exports of Japan might merely be a reflection of a global production shift by Japanese multinational corporations. We investigate the effect of Japanese trade on the exports of other countries to the United States in the 1990s. In our sample we include eight Asian countries besides the US and Japan. With the trade data disaggregated at the HS 4-digit level, we regress the exports of an Asian country to the US on the Japanese exports to the US and the third-country, and the Japanese FDI to a third-country in a panel data specification. Among eight countries investigated, we find the evidence that Chinese and Japanese exports are substitutes in the US market while the exports of China to the US are partly promoted by Japanese FDI to China. The estimation result confirms a view that China competes vigorously with Japan in the US market while Japanese multinationals are adjusting their production bases to China in a process of reforming a new global production network.

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File URL: http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp18.pdf
File Function: First version, 2004
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Paper provided by Kyushu Sangyo University, Faculty of Economics in its series Discussion Papers with number 18.

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Length: 32 pages
Date of creation: Oct 2004
Date of revision:
Publication status: Published in Asia Pacific Business Review, 2006, 12(3), pages 285-307
Handle: RePEc:kyu:dpaper:18
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Web page: http://www.ip.kyusan-u.ac.jp/keizai/

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