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Once an enemy, forever an enemy? The long-run impact of the Japanese invasion of China from 1937 to 1945 on trade and investment

Yi Che (), Julan Du, Yi Lu () and Zhigang Tao ()

Journal of International Economics, 2015, vol. 96, issue 1, 182-198

Abstract: In this study, we exploit one of the most important conflicts of the 20th century between what are currently the world's second and third largest economies, that is, the Japanese invasion of China from 1937 to 1945, to investigate the long-term impact of conflicts between countries on cross-border trade and investment. We find that Japanese multinationals are less likely to invest in Chinese regions that suffered greater civilian casualties during the Japanese invasion, and these regions also trade less with Japan. Our study shows that historical animosity still influences international trade and investment, despite the trend toward an increasingly globalized world.

Keywords: Sino-Japanese war; Trade and investment; Difference-in-differences estimation (search for similar items in EconPapers)
JEL-codes: D74 F1 F21 F23 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Once an enemy, forever an enemy? the long-run impact of the Japanese invasion of China from 1937 to 1945 on trade and investment (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:96:y:2015:i:1:p:182-198

DOI: 10.1016/j.jinteco.2015.01.001

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