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Why Japan lost its comparative advantage in producing electronic parts and components

Willem Thorbecke ()

Journal of the Japanese and International Economies, 2019, vol. 54, issue C

Abstract: Japanese electronic parts and components (ep&c) exports fell in value during and after the Global Financial Crisis (GFC) while Taiwan and South Korea's ep&c exports soared. This paper reports that the yen appreciation between 2007 and 2011 reduced yen ep&c export prices by 28%. The results also indicate that yen appreciations led to small declines in ep&c export volumes and, together with NT dollar depreciations, to large decreases in Japanese semiconductor stock prices. The strong yen caused yen export prices during and after the GFC to tumble relative to yen production costs, decimating profits. Plummeting profits in turn hindered Japanese ep&c firms from investing enough in capital and innovation to compete with nimble rivals.

Keywords: Electronic parts and components; Exchange rate pass-through; Exchange rate elasticities (search for similar items in EconPapers)
JEL-codes: F32 F41 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:54:y:2019:i:c:s0889158319300413

DOI: 10.1016/j.jjie.2019.101050

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