Why Has the Border Effect in the Japanese Machinery Sectors Declined? The Role of Business Networks in East Asian Machinery Trade

Kyoji Fukao and Toshihiro Okubo

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper analyzes the impact of firm networks on Japan's national border effect. We estimate gravity equations using data on Japan's international and interregional trade in four machinery industries (electrical, general, precision and transportation machinery). The machinery sector is the most important manufacturing sector for exports and outward foreign direct investment (FDI) in Japan. By taking into account international as well as interregional firm networks, we find that ownership relations usually enhance exports from parent firms to establishment. Consequently we can explain 15% (7%, 1% and 0.5%) of the decline in Japan's border effect from 1980 to 1995 in precision (transportation, general electrical) machinery sector by the increase of international networks.

Keywords: Gravity model; Border effect; Firm networks; Fragmentation (search for similar items in EconPapers)
JEL-codes: F14 F17 F21 L14 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-bec, nep-int, nep-net and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd11-197.pdf (application/pdf)

Related works:
Journal Article: Why Has the Border Effect in the Japanese Machinery Sectors Declined?: The Role of Business Networks in East Asian Machinery Trade (2011)
Working Paper: Why Has the Border Effect in the Japanese Machinery Sectors Declined? The role of business networks in East Asian machinery trade (2011)
Working Paper: Why Has the Border Effect in the Japanese Machinery Sectors Declined? The Role of Business Networks in East Asian-Machinery Trade (2008)
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