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Why Has the Border Effect in the Japanese Market Declined? The Role of Business Networks in East Asia

Kyoji Fukao and Toshihiro Okubo

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

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.

Pages: 50 pages
Date: 2004-03
New Economics Papers: this item is included in nep-geo and nep-sea
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:04016

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