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Globalization, Productivity and Plant Exit - Evidence from Japan -

Author

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  • INUI Tomohiko
  • Richard KNELLER
  • MATSUURA Toshiyuki
  • Danny McGWAN

Abstract

During the 1980s and 1990s, Japanese manufacturers began to relocate production from sites in Japan to low-wage East Asian countries such as China, Malaysia and Thailand. Imports of manufacturing goods increased substantially over the same period. This rapid rise in imports, and proliferation of globalization, has led to concerns among policymakers that firms and plants may close. The media portray foreign multinationals as closing down productive Japanese plants and relocating them elsewhere in Asia. We find that this is not the case. Equally, the plants that are closed are below average productivity and the exit component contributes a very small fraction to productivity growth (using both the GR and FHK methods). In short, plant exit has not been the reason for Japan's low productivity growth in the 1990s. Instead a lack of productivity growth within plants is identified as being the main cause.

Suggested Citation

  • INUI Tomohiko & Richard KNELLER & MATSUURA Toshiyuki & Danny McGWAN, 2009. "Globalization, Productivity and Plant Exit - Evidence from Japan -," Discussion papers 09048, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:09048
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    File URL: https://www.rieti.go.jp/jp/publications/dp/09e048.pdf
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    Cited by:

    1. Shawn Arita & Kiyoyasu Tanaka, 2014. "Heterogeneous multinational firms and productivity gains from falling FDI barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 83-113, February.
    2. David L. Rigby & Thomas Kemeny & Abigail Cooke, 2017. "Plant exit and U.S. imports from low-wage countries," International Economics, CEPII research center, issue 149, pages 27-40.
    3. Hauptmann, Andreas & Schmerer, Hans-Jörg & Schwanebeck, Benjamin, 2024. "Plant-level adjustments to imports and exports at the extensive margin," China Economic Review, Elsevier, vol. 87(C).
    4. Codruța Dura & Oana Dobre-Baron, 2011. "Analysis of Foreign Direct Investments Engaged by Japanese Multinational Companies," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(2), pages 81-92.
    5. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    6. Rosanna Pittiglio & Filippo Reganati, 2015. "Multinational Enterprises, Technological Intensity and Firm Survival. Evidence from Italian Manufacturing and Services Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(1), pages 87-106, March.
    7. Ferragina, Anna & Pittiglio, Rosanna & Reganati, Filippo, 2012. "Multinational status and firm exit in the Italian manufacturing and service sectors," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 363-372.
    8. Lara Abdel Fattah & Sylvain Barthélémy & Nadine Levratto & Benjamin Trempont, 2016. "Post-reorganization survival: a semi-parametric and non-parametric analysis of firm characteristics," EconomiX Working Papers 2016-22, University of Paris Nanterre, EconomiX.

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