IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/23017.html
   My bibliography  Save this paper

The Impact of Export Controls on International Trade: Evidence from the Japan–Korea trade dispute in the semiconductor industry

Author

Listed:
  • Ryo MAKIOKA
  • Hongyong ZHANG

Abstract

In July 2019, the Japanese government announced export controls to South Korea of three chemical inputs essential in semiconductor production. The paper investigates the short- to middle-run effect of these Japan–Korea export controls on trade patterns (i.e., Japanese export and production and Korean import, export, and production) along the global value chain of the semiconductor industry. The results show that the export controls caused a large decline in Japanese exports to South Korea of one of the three restricted inputs, hydrogen fluoride, but not in the other two restricted inputs, photoresist and fluorinated polyimide. Second, the restrictions increased Japanese exports of hydrogen fluoride to the U.S., and thus did not cause a decrease in the Japanese production of semiconductor-related products. Third, South Korea reallocated input sourcing from Japan to economies such as Belgium, the U.S., and Taiwan. Fourth, South Korea increased the export of semiconductor manufacturing equipment to China, possibly because of its semiconductor production relocation to China. Fifth, Korean firms' domestic production and Japanese affiliates' local production in South Korea increased after the export controls. These results suggest a potential role of export controls in sourcing patterns and production relocation in the semiconductor industry.

Suggested Citation

  • Ryo MAKIOKA & Hongyong ZHANG, 2023. "The Impact of Export Controls on International Trade: Evidence from the Japan–Korea trade dispute in the semiconductor industry," Discussion papers 23017, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:23017
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/23e017.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bown, Chad, 2020. "How the United States Marched the Semiconductor Industry into Its Trade War with China," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(4), pages 349-388, December.
    2. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," Working Papers 676, Research Seminar in International Economics, University of Michigan.
    3. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    4. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    5. MacKinnon, James G. & Nielsen, Morten Ørregaard & Webb, Matthew D., 2023. "Cluster-robust inference: A guide to empirical practice," Journal of Econometrics, Elsevier, vol. 232(2), pages 272-299.
    6. Mary Amiti & Stephen J. Redding & David E. Weinstein, 2019. "The Impact of the 2018 Tariffs on Prices and Welfare," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 187-210, Fall.
    7. Simon A. B. Schropp & Christian Lau & Olim Latipov & Kornel Mahlstein, 2022. "Quantifying the impact of the latest U.S. tariff sanctions on Russia - a sectoral analysis," Working Papers 2022-08, The George Washington University, Institute for International Economic Policy.
    8. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    9. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    10. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Ivan, Deseatnicov, 2022. "The impact of the U.S.-China conflict and the strengthening of export controls on Japanese exports," IDE Discussion Papers 852, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    11. Zhe Chen & Zhongzhong Hu & Kai Li, 2021. "The spillover effect of trade policy along the value Chain: Evidence from China's rare earth‐related sectors," The World Economy, Wiley Blackwell, vol. 44(12), pages 3550-3582, December.
    12. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," NBER Working Papers 26611, National Bureau of Economic Research, Inc.
    13. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    2. Rodríguez-Puello, Gabriel, 2024. "Digging for Trouble? Uncovering the Link Between Mining Booms and Crime," OSF Preprints s8ayp_v1, Center for Open Science.
    3. Robert Messerle & Jonas Schreyögg, 2024. "Country-level effects of diagnosis-related groups: evidence from Germany’s comprehensive reform of hospital payments," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 25(6), pages 1013-1030, August.
    4. Michael Funke & Kadri Männasoo & Helery Tasane, 2023. "Regional Economic Impacts of the Øresund Cross-Border Fixed Link: Cui Bono?," CESifo Working Paper Series 10557, CESifo.
    5. Andrew Hanson & Shawn Rohlin, 2024. "Local employment multipliers for large publicly subsidized firms: Evidence from a synthetic control approach," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 491-526, March.
    6. Ayala, Luis & Martín-Román, Javier & Navarro, Carolina, 2023. "Unemployment shocks and material deprivation in the European Union: A synthetic control approach," Economic Systems, Elsevier, vol. 47(1).
    7. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.
    8. Gabriel, Ricardo Duque & Pessoa, Ana Sofia, 2024. "Adopting the euro: A synthetic control approach," European Journal of Political Economy, Elsevier, vol. 83(C).
    9. Bonander, Carl & Ekman, Mats & Jakobsson, Niklas, 2022. "Vaccination nudges: A study of pre-booked COVID-19 vaccinations in Sweden," Social Science & Medicine, Elsevier, vol. 309(C).
    10. Roy Cerqueti & Raffaella Coppier & Alessandro Girardi & Marco Ventura, 2022. "The sooner the better: lives saved by the lockdown during the COVID-19 outbreak. The case of Italy," The Econometrics Journal, Royal Economic Society, vol. 25(1), pages 46-70.
    11. Victor Hugo de Oliveira & Ines Lee & Climent Quintana‐Domeque, 2022. "The effect of increasing Women's autonomy on primary and repeated caesarean sections in Brazil," Health Economics, John Wiley & Sons, Ltd., vol. 31(8), pages 1800-1804, August.
    12. Pedro Drugowick & Paula Carvalho Pereda, 2023. "Crime and economic growth: A case study of Manaus, Brazil," Review of Development Economics, Wiley Blackwell, vol. 27(4), pages 2123-2148, November.
    13. Crudu, Federico & Di Stefano, Roberta & Mellace, Giovanni & Tiezzi, Silvia, 2024. "The gray zone: How not imposing a strict lockdown at the beginning of a pandemic can cost many lives," Labour Economics, Elsevier, vol. 89(C).
    14. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits," Discussion Papers of DIW Berlin 2041, DIW Berlin, German Institute for Economic Research.
    15. Kramer, Niklas & Lessmann, Christian, 2023. "The Effects of Carbon Trading: Evidence from California’s ETS," MPRA Paper 116796, University Library of Munich, Germany.
    16. Rodríguez-Puello, Gabriel, 2024. "Digging for Trouble? Uncovering the Link Between Mining Booms and Crime," OSF Preprints s8ayp, Center for Open Science.
    17. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: Causal Effects of Fuel Taxation and Mediating Mechanisms for Reducing Climate and Pollution Costs," CESifo Working Paper Series 10508, CESifo.
    18. Carl Bonander & Mats Ekman & Niklas Jakobsson, 2023. "When do default nudges work?," Oxford Open Economics, Oxford University Press, vol. 2, pages 391-425.
    19. Izabela Sobiech Pellegrini, 2022. "Untimely Reopening? Increase in the Number of New COVID‐19 Cases After Reopening in One Brazilian State," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(4), pages 675-693, August.
    20. Clark, Robert & Fabiilli, Christopher & Lasio, Laura, 2022. "Collusion in the US generic drug industry," International Journal of Industrial Organization, Elsevier, vol. 85(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:23017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.