Distance on FDI and Trade: The Roles of China and Mexico in the Pacific Basin
In this study, we investigate the dynamics of the trilateral trade relationship among the U.S., Japan and an emerging economy in the Pacific Basin. Our particular attention is paid to two emerging countries; China and Mexico. In what we call the “triangular trade approach,” we explore how Japanese trade with and foreign direct investment to an emerging economy affect its exports to the US market. We apply the trilateral trade approach to eight Southeast Asian countries, four American continent countries and four European countries. Our empirical results suggest that the exports of China and Mexico are directly competing with those of Japan in US markets while the exports of China and Mexico to the US also appears to be promoted partly by Japanese exports to these countries. However, after controlling for Japan’s FDI to these countries, the trade enhancing effect of Japanese exports disappears for China, leading us to conclude that Japanese exports to China are positively correlated with Chinese exports to the US through an increase in vertical trade between Japanese multinationals and their affiliates in China. Our results indicate important distinction about two distances: proximity to home country and proximity to market.
|Date of creation:||Mar 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ip.kyusan-u.ac.jp/keizai/
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.:
- Yushi Yoshida & Hiro Ito, 2006.
"How Do the Asian Economies Compete With Japan in the US Market? Is China Exceptional? A Triangular Trade Approach,"
Asia Pacific Business Review,
Taylor & Francis Journals, vol. 12(3), pages 285-307, July.
- Yushi Yoshida & Hiro Ito, 2004. "How do the Asian Economies Compete with Japan in the US Market, China Exceptional? A Triangular Trade Approach," Discussion Papers 18, Kyushu Sangyo University, Faculty of Economics.
- Clausing, Kimberly A, 2000. "Does Multinational Activity Displace Trade?," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 190-205, April.
- Jeffrey A. Frankel & Andrew K. Rose, 1996.
"The Endogeneity of the Optimum Currency Area Criteria,"
NBER Working Papers
5700, National Bureau of Economic Research, Inc.
- Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-25, July.
- Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
- Grether, Jean-Marie & de Melo, Jaime & Olarreaga, Marcelo, 2001.
"Who determines Mexican trade policy?,"
Journal of Development Economics,
Elsevier, vol. 64(2), pages 343-370, April.
- de Melo, Jaime & Grether, Jean-Marie & Olarreaga, Marcelo, 1999. "Who Determines Mexican Trade Policy?," CEPR Discussion Papers 2176, C.E.P.R. Discussion Papers.
- Grether, Jean-Marie & de Melo, Jaime & Olarreaga, Marcelo, 1999. "Who determines Mexican trade policy?," Policy Research Working Paper Series 2187, The World Bank.
- Bernard, Andrew B. & Bradford Jensen, J., 1999.
"Exceptional exporter performance: cause, effect, or both?,"
Journal of International Economics,
Elsevier, vol. 47(1), pages 1-25, February.
- Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
- Andrew B. Bernard & J. Bradford Jensen, 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," NBER Working Papers 6272, National Bureau of Economic Research, Inc.
- Leamer, E. & Levingsohn, J., 1994.
"International Trade Theory: The Evidence,"
368, Research Seminar in International Economics, University of Michigan.
- Jose E. Galdon-Sanchez & James A. Schmitz, Jr., 2003.
"Competitive pressure and labor productivity: world iron ore markets in the 1980s,"
Federal Reserve Bank of Minneapolis, issue Spr, pages 9-23.
- José E. Galdón-Sánchez & James A. Schmitz Jr., 2002. "Competitive Pressure and Labor Productivity: World Iron-Ore Markets in the 1980's," American Economic Review, American Economic Association, vol. 92(4), pages 1222-1235, September.
- Belderbos, Rene & Sleuwaegen, Leo, 1998. "Tariff jumping DFI and export substitution: Japanese electronics firms in Europe," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 601-638, September.
- Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004.
"Export Versus FDI with Heterogeneous Firms,"
American Economic Review,
American Economic Association, vol. 94(1), pages 300-316, March.
- Hanson, Gordon H., 2001.
"U.S.-Mexico Integration and Regional Economies: Evidence from Border-City Pairs,"
Journal of Urban Economics,
Elsevier, vol. 50(2), pages 259-287, September.
- Gordon H. Hanson, 1996. "U.S.-Mexico Integration and Regional Economies: Evidence from Border- City Pairs," NBER Working Papers 5425, National Bureau of Economic Research, Inc.
- Gary R. Saxonhouse, 1993.
"What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?,"
Journal of Economic Perspectives,
American Economic Association, vol. 7(3), pages 21-43, Summer.
- Saxonhouse, G.R., 1993. "What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?," Working Papers 337, Research Seminar in International Economics, University of Michigan.
- Head, Keith & Ries, John, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-22, February.
- Blonigen, Bruce A., 2001.
"In search of substitution between foreign production and exports,"
Journal of International Economics,
Elsevier, vol. 53(1), pages 81-104, February.
- Bruce A. Blonigen, 1999. "In Search of Substitution Between Foreign Production and Exports," NBER Working Papers 7154, National Bureau of Economic Research, Inc.
- Ana Cuadros & Vicente Orts & Maite Alguacil, 2004. "Openness and Growth: Re-Examining Foreign Direct Investment, Trade and Output Linkages in Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 40(4), pages 167-192.
- Yamawaki, Hideki, 1991. "Exports and Foreign Distributional Activities: Evidence on Japanese Firms in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 294-300, May.
- Robert Z. Lawrence, 1991. "Efficient or Exclusionist: The Import Behavior of Japanese Corporate Groups," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 311-341.
- Fung, K C & Iizaka, Hitomi, 1998. "Japanese and US Trade with China: A Comparative Analysis," Review of Development Economics, Wiley Blackwell, vol. 2(2), pages 181-90, June.
When requesting a correction, please mention this item's handle: RePEc:kyu:dpaper:24. 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: (Yoshitsugu Kitazawa)
If references are entirely missing, you can add them using this form.