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Japanese manufacturing facing post-Fukushima power crisis: a dynamic computable general equilibrium analysis with foreign direct investment

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  • Nobuhiro Hosoe

Abstract

The Great East Japan Earthquake and the subsequent tsunami that hit and severely damaged the Fukushima Daiichi Nuclear Power Station resulted indirectly in the shutdown of most of the nuclear power plants in Japan. To compensate for the lost nuclear power supply, more fossil fuels were used. People became concerned that this could be disadvantageous for domestic manufacturing industries and accelerated their offshoring to Asia, especially China, through foreign direct investment (FDI). We used a world trade computable general equilibrium (CGE) model with endogenous FDI from Japan to China to quantify the impact of the power crisis on the Japanese manufacturing sectors. We found that the power crisis as well as FDI would adversely affect several sectors that use power intensively, but would benefit the transportation equipment (TEQ), electric equipment (EEQ) and machinery sectors, despite the common expectation that these sectors would undergo a so-called 'hollowing-out.'

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  • Nobuhiro Hosoe, 2014. "Japanese manufacturing facing post-Fukushima power crisis: a dynamic computable general equilibrium analysis with foreign direct investment," Applied Economics, Taylor & Francis Journals, vol. 46(17), pages 2010-2020, June.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:17:p:2010-2020
    DOI: 10.1080/00036846.2014.892198
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    References listed on IDEAS

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    3. Syed Shoyeb Hossain & Huang Delin, 2022. "Measuring economic impact in Korea, Japan, India, China, and ASEAN considering agricultural sectors: a dynamic CGE approach based on GAMS," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(2), pages 571-613, May.
    4. Zhou, Jing & Latorre, María C., 2014. "How FDI influences the triangular trade pattern among China, East Asia and the U.S.? A CGE analysis of the sector of Electronics in China," Economic Modelling, Elsevier, vol. 44(S1), pages 77-88.
    5. Latorre, Maria C., 2014. "CGE analysis of the impact of foreign direct investment and tariff reform on female and male wages," Policy Research Working Paper Series 7073, The World Bank.
    6. Hosoe, Nobuhiro, 2021. "Impact of tighter controls on Japanese chemical exports to Korea," Economic Modelling, Elsevier, vol. 94(C), pages 631-648.
    7. Yasunobu Wakashiro, 2019. "Estimating price elasticity of demand for electricity: the case of Japanese manufacturing industry," International Journal of Economic Policy Studies, Springer, vol. 13(1), pages 173-191, January.
    8. Hossain, Sharif M. & Hosoe, Nobuhiro, 2020. "Welfare and equity impacts of cross-border factor mobility in Bangladesh: A general equilibrium analysis," Economic Modelling, Elsevier, vol. 87(C), pages 172-184.
    9. Hajime Tanaka & Michael C Huang, 2021. "Impact assessment and a fiscal recovery policy for tsunami risk: GIS and the general equilibrium approach in Hakodate city, Japan," Environment and Planning B, , vol. 48(5), pages 1144-1160, June.
    10. Hosoe, Nobuhiro, 2022. "Economic de-integration in North America and foreign direct investment from Japan," Japan and the World Economy, Elsevier, vol. 61(C).
    11. Latorre, María C., 2016. "A CGE Analysis of the Impact of Foreign Direct Investment and Tariff Reform on Female and Male Workers in Tanzania," World Development, Elsevier, vol. 77(C), pages 346-366.
    12. María C. Latorre & Nobuhiro Hosoe, 2014. "How much can foreign multinationals affect the Chinese economy? A dynamic general equilibrium analysis of Japanese FDI," GRIPS Discussion Papers 14-16, National Graduate Institute for Policy Studies.
    13. Ortiz Valverde, Gabriela & Latorre, MaríaC. & Cubells, José Francisco, 2024. "The EU–UK Trade and Cooperation Agreement: A short and long-term comprehensive analysis including FDI," Economic Modelling, Elsevier, vol. 139(C).
    14. Michael C. Huang & Nobuhiro Hosoe, 2015. "Investigating Fiscal and Social Costs of Recovery Policy: A Dynamic General Equilibrium Analysis of a Compound Disaster in Northern Taiwan," GRIPS Discussion Papers 15-01, National Graduate Institute for Policy Studies.
    15. Latorre, María C. & Hosoe, Nobuhiro, 2016. "The role of Japanese FDI in China," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 226-241.
    16. Zhou, Jing & Latorre, María C., 2021. "FDI in China and global production networks: Assessing the role of and impact on big world players," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1225-1240.
    17. Michael C. Huang & Nobuhiro Hosoe, 2014. "A General Equilibrium Assessment on a Compound Disaster in Northern Taiwan," GRIPS Discussion Papers 14-06, National Graduate Institute for Policy Studies.
    18. Latorre, María C., 2014. "A CGE analysis of the impact of foreign direct investment and tariff reform on female and male wages," Conference papers 332453, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Huang, Michael C. & Hosoe, Nobuhiro, 2017. "Fiscal and social costs of recovery programs for an earthquake disaster in northern Taiwan," Journal of Asian Economics, Elsevier, vol. 53(C), pages 1-17.

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