Agglomeration Economies in Japan: Technical Efficiency, Growth and Unemployment

This paper examines if the effects of agglomeration economies get manifested in technical efficiency and generate faster economic growth and higher (lower) levels of employment (unemployment). Using the prefecture level data for each of the two-digit groups of industries in Japan, the paper estimates region-specific technical efficiency index based on the stochastic frontier production function framework. The results of the factor analysis show that in most of the industry-groups (with a few exceptions) efficiency has a positive association with external scale variable(s). Though the relationship is not seen to be very strong, it would be equally erroneous to ignore the effect of agglomeration economies on efficiency. In the case of some of the light goods industries the agglomeration effect is relatively stronger. Further, economic growth varies positively with external scale variable(s) and unemployment rate tends to fall with respect to growth and concentration. All this tends to suggest that measures against industrial concentration may be counter-productive, particularly in the context of globalisation when countries are in dire need of raising productivity.

Procyclical Productivity and Returns-to-Scale in Philippine Manufacturing

The Philippines is regarded as a highly oligopolistic economy, and it is argued that this is a cause of the relative stagnation of the economy to neighbouring East Asian economies. This presumption might be associated with increasing returns to scale and market power, which are consistent with the procyclical total factor productivity that is observed in the Philippines and the United States. However, this study found no strong evidence supporting increasing returns for aggregate manufacturing and three-digit manufacturing industries during 1956-1980 in the Philippines, based on data constructed by Hooley (1985). Further, this study does not support external effect discussed in Caballero and Lyons (1992).

New aspects of intra-industry trade in EU countries

Using the HS eight-digit product level trade data of EU countries for the period 1988 – 2010, we analyse Intra-industry trade within EU countries as well as with Eastern European countries and with China. We find the Eastern European countries’ rise up the quality ladder, and by contrast the substantially lower prices of China’s exports to EU countries vis-à-vis China’s imports from them. The contrast between EU trade with the Eastern European countries and with China is present even in very recent years.

FTA utilization : certificate of origin data versus customs data

This paper empirically examines what kinds of elements affect the gap in free trade agreement (FTA) utilization with regard to customs data and certificates of origin (CoOs) data. We focus on Thai exports to Korea under the ASEAN-Korea FTA in 2011. As a result, we found that the products with the higher demand volatility or those with a larger number of tariff-line products within the same harmonized system (HS) six-digit code have the larger gap. Another important finding is that the difference between the HS version at the time of the FTA negotiation and the current HS version does not have significant association with the gap. These findings have important implications.

Did the least developed countries benefit from duty-free quota-free access to the Japanese market?

Countries classified as least developed countries (LDCs) were granted duty-free quota-free (DFQF) access to the Japanese market. This study examines the impact of that access and finds that, in general, it did not benefit the LDCs. The construction of concordance tables for Japan's 9 digit tariff line codes enables analysis at the tariff line level, which overcomes a possible aggregation bias. The exogenous nature of DFQF access mitigates the endogeneity problem. Various estimation models, including the triple difference estimator, show that in general the LDCs did not benefit from DFQF access to the Japanese market. The total value of imports from LDCs has been increasing, but the imports granted both zero tariffs and substantial preference margins over non-LDC countries were not successful. These findings suggest that for LDCs the tariff barrier is a relatively small obstacle: Trade is affected more strongly by other factors, such as infrastructure, nontariff barriers, geographic distance, and cultural differences.

Product quality and intra-industry trade

In this study, we argue that the conventional intra-industry trade (IIT) index does not address the quality issue directly and propose a methodology to make full use of unit-price gap information to deduce quality differences between simultaneously exported and imported products. By applying this measure to German trade data at the eight-digit level, we study the quality improvement of Chinese export goods in its IIT with Germany. We compare the case of China with those of Eastern European countries, which are also major trading partners of Germany. Our results show that the unit-value difference in IIT between Germany and Eastern European countries is clearly narrowing. However, China's export prices to Germany are much lower than Germany's export prices to China, and this gap has not narrowed over the last 23 years. This is at odds with the common perception that China's product quality has improved, as documented by Rodrik (2006) and Schott (2008). Our results support Xu (2010), which argued that incorporating the quality aspect of the exported goods weakens or even eliminates the evidence of the sophistication of Chinese export goods in Rodrik (2006).