The impact of export controls on international trade: Evidence from the Japan–Korea trade dispute in semiconductor industry

Ryo Makioka and Hongyong Zhang

Journal of the Japanese and International Economies, 2024, vol. 74, issue C

Abstract: In July 2019, the Japanese government announced export controls to South Korea of three chemical inputs essential in semiconductor production. This paper investigates the short- to middle-run effect of the Japan–Korea export controls on the trade patterns of the restricted and other related products 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, South Korea reallocated the sourcing of the restricted chemical inputs from Japan to other economies such as Belgium, the U.S., and Taiwan. Third, there was negative spillover effect on the South Korean imports of semiconductor manufacturing equipments, which is used complementarily with the restricted inputs in the semiconductor production. These results suggest a potential role of export controls in sourcing patterns and production relocation in the semiconductor industry.

Keywords: Trade; Export controls; Semiconductors; Japan–Korea trade disputes (search for similar items in EconPapers)
JEL-codes: F12 F13 F51 F52 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:74:y:2024:i:c:s0889158324000327

DOI: 10.1016/j.jjie.2024.101336

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