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Why Has the Border Effect in the Japanese Market Declined?

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Abstract

This paper analyzes the causes of the decline in Japan’s border effect by estimating gravity equations for Japan’s international and interregional trade in four machinery industries (electrical, general, precision, and transportation machinery). In the estimation, we explicitly take account of firms’ networks. We find that ownership relations usually enhance trade between two regions (countries), and also find that we can explain 35% of the decline in Japan’s border effect from 1980 to 1995 in the electrical machinery industry by the increase of international networks. JEL Classification numbers: F14; F17; F21; L14.

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  • Kyoji Fukao; Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined?," IHEID Working Papers 12-2004, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heiwp12-2004
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    Cited by:

    1. Marta Santamaría & Jaume Ventura & Uğur Yeşilbayraktar, 2020. "Borders within Europe," Economics Working Papers 1763, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2024.
    2. Toshihiro Okubo, 2004. "Intra-industry Trade and Production Networks," IHEID Working Papers 13-2004, Economics Section, The Graduate Institute of International Studies.
    3. Federico Fantechi & Ugo Fratesi, 2023. "Border Effects on firm's productivity: The role of peripherality and territorial capital," Papers in Regional Science, Wiley Blackwell, vol. 102(3), pages 483-506, June.
    4. Felbermayr, Gabriel J. & Tarasov, Alexander, 2022. "Trade and the spatial distribution of transport infrastructure," Journal of Urban Economics, Elsevier, vol. 130(C).
    5. Tomoya Mori & Jens Wrona, 2021. "Centrality Bias in Inter-city Trade," KIER Working Papers 1056, Kyoto University, Institute of Economic Research.
    6. Hitoshi Sasaki & Yuko Koga, 2005. "Trade Patterns in Japan's Machinery Sector," Bank of Japan Working Paper Series 05-E-15, Bank of Japan.
    7. Toshihiro Okubo, 2007. "Intra‐industry Trade, Reconsidered: The Role of Technology Transfer and Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 30(12), pages 1855-1876, December.
    8. Ülengin, Füsun & Çekyay, Bora & Toktaş Palut, Peral & Ülengin, Burç & Kabak, Özgür & Özaydın, Özay & Önsel Ekici, Şule, 2015. "Effects of quotas on Turkish foreign trade: A gravity model," Transport Policy, Elsevier, vol. 38(C), pages 1-7.
    9. Santamaria, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," CAGE Online Working Paper Series 560, Competitive Advantage in the Global Economy (CAGE).
    10. Okubo, Toshihiro, 2007. "Trade bloc formation in inter-war Japan.: A gravity model analysis," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 214-236, June.
    11. Miren Lafourcade & Elisenda Paluzie Hernandez, 2005. "European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions," Working Papers in Economics 145, Universitat de Barcelona. Espai de Recerca en Economia.
    12. Rongji Huang & Tengfei Nie & Yangguang Zhu & Shaofu Du, 2020. "Forecasting Trade Potential Between China and the Five Central Asian Countries: Under the Background of Belt and Road Initiative," Computational Economics, Springer;Society for Computational Economics, vol. 55(4), pages 1233-1247, April.
    13. Wickes, Ron, 2021. "Trade deficits and trade conflict: The United States and Japan," Japan and the World Economy, Elsevier, vol. 60(C).
    14. Marta Santamaría & Jaume Ventura & Ugur Yesilbayraktar, 2020. "Borders within Europe," Working Papers 1229, Barcelona School of Economics.
    15. Santamaría, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," The Warwick Economics Research Paper Series (TWERPS) 1355, University of Warwick, Department of Economics.
    16. Ventura, Jaume & Santamaria, Marta & YeÅŸilbayraktar, UÄŸur, 2021. "Borders within Europe," CEPR Discussion Papers 15633, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Gravity Model; Border Effect; Networks.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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