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

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

Abstract: This paper analyzes the causes of the decline in Japan's border effect in four machinery industries (electrical, general, precision, and transportation machinery) by estimating gravity equations for Japan's international and interregional trade. In the estimation, we explicitly take account of firms' networks. We find that ownership relations usually enhance trade between two regions (countries); moreover, we 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.

Keywords: Gravity Model; Border Effect; Networks; Fragmentation (search for similar items in EconPapers)
JEL-codes: F14 F17 F21 L14 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-int, nep-net, nep-sea and nep-soc
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http://hi-stat.ier.hit-u.ac.jp/research/discussion/2007/pdf/D07-238.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 (2011)
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