How do the Asian Economies Compete with Japan in the US Market, China Exceptional? A Triangular Trade Approach

Yushi Yoshida and Hiro Ito

No 18, Discussion Papers from Kyushu Sangyo University, Faculty of Economics

Abstract: Political conflicts among trading partners have changed their forms with ever-increasing flows of foreign direct investment. A decrease in the exports of Japan might merely be a reflection of a global production shift by Japanese multinational corporations. We investigate the effect of Japanese trade on the exports of other countries to the United States in the 1990s. In our sample we include eight Asian countries besides the US and Japan. With the trade data disaggregated at the HS 4-digit level, we regress the exports of an Asian country to the US on the Japanese exports to the US and the third-country, and the Japanese FDI to a third-country in a panel data specification. Among eight countries investigated, we find the evidence that Chinese and Japanese exports are substitutes in the US market while the exports of China to the US are partly promoted by Japanese FDI to China. The estimation result confirms a view that China competes vigorously with Japan in the US market while Japanese multinationals are adjusting their production bases to China in a process of reforming a new global production network.

Keywords: China; Foreign Direct Investment; Japan; Trade; Triangular Trade Approach (search for similar items in EconPapers)
JEL-codes: F14 F23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2004-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Asia Pacific Business Review, 2006, 12(3), pages 285-307

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http://www.ip.kyusan-u.ac.jp/keizai-kiyo/dp18.pdf First version, 2004 (application/pdf)

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Journal Article: How Do the Asian Economies Compete With Japan in the US Market? Is China Exceptional? A Triangular Trade Approach (2006)
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