Inferring the Effects of Vertical Integration from Entry Games : An Analysis of the Generic Pharmaceutical Industry

This paper introduces a novel method for examining the effects of vertical integration. The basic idea is to estimate the parameters of a vertical entry game. By carefully specifying firms' payoff equations and constructing appropriate tests, it is possible to use estimates on rival profit effects to make inferences about the existence of vertical foreclosure. I estimate the vertical entry model using data from the US generic pharmaceutical industry. The estimates indicate that vertical integration is unlikely to generate anticompetitive foreclosure effects. On the other hand, significant efficiency effects are found to arise from vertical integration. I use the parameter estimates to simulate a policy that bans vertically integrated entry. The simulation results suggest that such a ban is counterproductive; it is likely to reduce entry into smaller markets.

Patent policy and public health in developing countries: lessons from Japan

The introduction of pharmaceutical product patents in India and other developing countries is expected to have a significant effect on public health and local pharmaceutical industries. This paper draws implications from the historical experience of Japan when it introduced product patents in 1976. In Japan, narrow patents and promotion of cross-licensing were effective tools to keep drug prices in check while ensuring the introduction of new drugs. While the global pharmaceutical market surrounding India today differs considerably from that of the 1970's, the Japanese experience offers a policy option that may profitably be considered by India today. The Indian patent system emphasizes the patentability requirement in contrast to the Japanese patent policy which relied on narrow patents and extensive licensing. R&D by local firms and the development of local products may be promoted more effectively under the Japanese model.

Indian Patent Policy and Publich Health : implications from the Japanese Experience

The introduction of pharmaceutical product patents in India and other developing countries is expected to have a significant effect on public health and local pharmaceutical industries. This paper draws implications from the historical experience of Japan when it introduced product patents in 1976. In Japan, narrow patents and promotion of cross-licensing were effective tools to keep drug prices in check while ensuring the introduction of new drugs. While the global pharmaceutical market surrounding India today differs considerably from that of the 1970's, the Japanese experience offers a policy option that may profitably be considered by India today. The Indian patent system emphasizes the patentability requirement in contrast to the Japanese patent policy which relied on narrow patents and extensive licensing. R&D by local firms and the development of local products may be promoted more effectively under the Japanese model.

Factors Underlying the Formation of Industrial Clusters in Japan and Industrial Cluster Policy: A Quantitative Survey

The purpose of this report is to use information provided by a questionnaire survey to analyze the factors and processes underlying the formation of industrial clusters in Japan. The study, based on questionnaire surveys, forms part of an "Industrial Cluster Project". The Japanese government has implemented policies for industrial clusters so as to enable Japanese industries to maintain competitive power in global markets, and to aid the self-sufficient expansion of local industries. The government's project goes under the heading "Industry Agglomeration for the Recovery of Local Industries with respect to so-called "Industry Clusters." The authors aim to identify what expectations are held of government by the enterprises that make up industrial clusters. As part of our investigation, we used the results of a survey conducted by UNDP in 2004. Tsuji's study, published by the Osaka School of International Public Policy, surveyed 1198 small or medium sized manufacturing companies located in O ward, Tokyo and Higashi Osaka city, Osaka prefecture. The outcome of the present study, together with data from Tsuji's work on IT usage by SMEs in Japan, is meant to form the basis for policy design and implementation.

Exploring the sources of China's challenge to Japan : models of industrial organisation in the motorcycle industry

In view of the recent rise of China, this paper looks into one of the most important yet relatively overlooked ingredients of the Chinese success: industrial organisation. It will examine the case of the motorcycle industry, in which the rise of Chinese manufacturers even disrupted the established dominance of Japanese industry leaders. Adopting the modified version of the global value chain governance framework, this paper shows that the rise of China has been driven by a distinctive arm’s-length model of industrial organisation, which is in sharp contrast to the conventional captive model that has sustained the Japanese leadership.

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.

Myanmar and Japan: How Close Friends Become Estranged

Independent Myanmar and Japan had long held the strongest ties among Asian countries, and they were often known as having "special relations" or a "historically friendly relationship." Such relations were guaranteed by the sentiments and experiences of the leaders of both countries. Among others, Ne Win, former strongman throughout the socialist period (1962-1988), was educated and trained by the Japanese army officers of the Minami Kikan, leading to the birth of the Burma Independence Army (BIA). Huge official development assistance provided by the Japanese government also cemented this special relationship. However, the birth of the present military government (SLORC/SPDC) in 1988 drastically changed this favorable relationship between the two countries. When the military seized power in a coup, Japan was believed to be the only country that possessed sufficient meaningful influence on Myanmar to encourage a move toward national reconciliation between the junta and the opposition party led by Aung San Suu Kyi. In reality, Japan failed to exert such an influence due to its sour relations with the military government and reduced influence in the new international and regional political landscape. What is worse, Japan seems to be losing its say on Myanmar issues in the international political arena, as it has been wavering in limbo between the sanctionist forces, such as the United States and the European Union, and engagement forces, such as China and ASEAN.

JETRO and Japan's Postwar Export Promotion System: Messages for Latin American Export Promotion Agencies

This paper tries to explain how the Japanese postwar export promotion system worked and what kind of roles JETRO played in this system. Two case studies of JETRO's successful export promotion activities were also introduced. The paper also points out the themes to be solved by the TPO (Trade Promotion Organizations). Finally the paper shows four advices for Latin American Export Promotion Agencies, based upon JETRO's postwar experiences.

Intra-regional trade between China, Japan, and Korea : before and after the financial crisis

East Asian economies have been heavily dependent on the U.S. and EU markets, especially for the export of final goods. Therefore, once the financial crisis hit Western economies hard, the East Asian economies lost their major markets.Their production networks then worked to the region's disadvantage and stifled industrial development.This reflects the vulnerability of the East Asian economies which have adopted an export-led growth strategy. Such vulnerability needs to be addressed to prevent future economic crises, as well as to sustain economic growth. This paper examines the trade structure of the three countries-China, Japan, and Korea-before and after the Lehman Shock, and discusses how the three countries should cooperate in addressing imbalances in the trade structure.

Innovation networks in China, Japan, and Korea : evidence from Japanese patent data

The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using Japanese patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw little change, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common field of prominent technology is "electronic circuits and communication technologies". Patent citations suggest that technology flows were largest in the electronic technology, pointing to the deepening of innovation networks in these countries.

Innovation networks in China, Japan, and Korea : further evidence from U.S. patent data

The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using U.S. patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw gradual changes, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common fields of prominent technology are electronics and semiconductors. Patent citations suggest that technology flows were largest in the electronics technology, pointing to the deepening of innovation networks in these countries. Together with our prior work, the Japanese and U.S. data produce similar conclusions about innovation networks.

The Japan-Peru FTA : antecedents, significance and main features

The Economic Partnership Agreement (EPA) between Japan and Peru came into effect on March 1, 2012. This paper provides background information about this agreement's significance, mostly from a Peruvian point of view. It focuses on the following subjects: the statistical trends showing Peru's declining shares in Japan's trade and investment flows with Latin American countries between the mid-1970s and mid-2000s, the main explanatory factors of such a deterioration in Peru's economic position over that period, the changes of trade policy strategy in both countries since the 2000s, and the EPA negotiation process and some of its key results as featured in the text of the agreement.

Political economy of low sulfurization and air pollution control policy in Japan : SOx emission reduction by fuel conversion

In the early stages of the development of Japan’s environmental policy, sulfur oxide (SOx) emissions, which seriously damage health, was the most important air pollution problem. In the second half of the 1960s and the first half of the 1970s, the measures against SOx emissions progressed quickly, and these emissions were reduced drastically. The most important factor of the reduction was the conversion to a low-sulfur fuel for large-scale fuel users, such as the electric power industry. However, industries started conversion to low-sulfur fuel not due to environmental concerns, but simply to reduce costs. Furthermore, the interaction among the various interests of the electric power industry, oil refineries, the central government, local governments, and citizens over the energy and environmental policies led to the measures against SOx emissions by fuel conversion.