Competing At Home To Win Abroad: Evidence From Japanese Industry

Mariko Sakakibara and Michael E. Porter

The Review of Economics and Statistics, 2001, vol. 83, issue 2, 310-322

Abstract: The study explores the influence of domestic competition on international trade performance, using data from a broad sample of Japanese industries. Domestic rivalry is measured directly using marketshare instability rather than employing structural variables such as seller concentration. We find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share, particularly when R&D intensity reveals opportunities for dynamic improvement and innovation. Conversely, trade protection reduces export performance. These findings support the view that local competition - not monopoly, collusion, or a sheltered home market - pressures dynamic improvement that leads to international competitiveness. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 2001
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