Cost Reduction Effects of "pseudo FTAs" in Asia -Application of a price model based on a multilateral I/O table-

This paper examines the repercussion effects on the production cost of industries in Asian countries when some countries eliminate tariffs and import commodity taxes on all imports. This kind of analysis is related in some sense to that measuring the effects of FTAs on economies, and thus may be considered as an analysis of “pseudo FTAs.” Examining a number of combinations of “pseudo FTAs” between China, Japan, and ASEAN, it is found that the case of China plus Japan plus ASEAN is the most effective “pseudo FTA” of the combinations in terms of production cost reduction. The method is a form of price model based on the Asian International Input-Output Table. Almost no studies on price models related to multilateral I/O tables have been implemented thus far.

A two-dimensional analysis of the impact of outward FDI on performance at home: evidence from Japanese manufacturing firms

This paper empirically investigates two areas of changes in firm behavior and performance at home before and after investing abroad. The first change is dependent upon the type of foreign direct investment (FDI): horizontal FDI or vertical FDI. The second change is dependent upon the firm’s domestic activities: production activities or non-production activities. From a theoretical standpoint, the impact of outward FDIs differs not only by type, but according to the firm’s activities. By exploiting two types of firm-level data that enable us to distinguish between production and non-production activities, our paper provides a detailed picture of the intra-firm changes in behavior and performance that occur as a result of production globalization.

Skill distribution and comparative advantage: a comparison of China and India

This paper empirically examines the different comparative advantages of two emerging economic giants, China and India, in relation to the different skill distribution patterns in each country. By utilizing industry export data on China and India from 1983 to 2000, we find that a country with a greater dispersion of skills (i.e., India, especially in the earlier years) has higher exports in industries with shorter production chains, whereas a country with a more equal dispersion of skills (i.e., China, especially in the later years) is found to have higher exports in industries with longer production chains. The causal relationship is fairly robust across different specifications. This empirical evidence supports our assumption that the likely mechanism for these results is the negative impact of low-skilled workers on input quality, which accumulates and becomes larger as the length of production chains and the proportion of low-skilled workers in the economy increase.

Chapter 7 Clusters of Modern and Local Industries in Vietnam

Since the introduction of the Doi Moi ('renovation') economic reform in 1986, Vietnam has experienced a transformation of its economic management, from a central planning economy to a market-oriented economy. High economic growth, created by the liberalization of activities in all sectors of the economy, has changed the economic structure of the country, and the once agriculture-based and poverty-stricken land now generates a midlevel income and possesses many industrial bases. Economic growth has also changed the landscape of the country. Business complexes have been built in metropolises like Ho Chi Minh City and Hanoi, and rice fields have been converted into industrial zones. As the number of enterprises increased, areas began to emerge where many enterprises agglomerated. Some of these 'clusters' were groups of cottage industry households, while many others were large-scale industrial clusters. As Porter [1998] argues, industrial clusters are the source of a nation's 'competitive advantage'. McCarty et al. [2005] indicate that in some key industries in Vietnam, some clusters of enterprises have been created, although the degree of agglomeration differs from one industry to another. Using industry census data from 2001, they include dot density maps for the 12 leading manufacturing industries in Vietnam. They show that most of the industries analyzed are clustered either in Hanoi or Ho Chi Minh City (or both). Among these 12 industries, the garments industry has the greatest tendency to cluster, followed by textile, rice, seafood, and paper industries. The fact that industrial clusters have begun to form in some areas could be a positive sign for Vietnam's future economic development. What is lacking in McCarty et al. [2005], however, is the identification of the participants in the industrial clusters. Some argue for the importance of small and medium enterprises (SMEs) in Vietnam's economic development (e.g. Nguyen Tri Thanh [2007], Tran Tien Cuong et al. [2008]), while others stress the impact of foreign direct investments (FDI) (for example, Tuan Bui [2009]). Adding information about the participants in the above cluster study (and in other studies of spatial patterns of location of enterprises) may broaden the scope for analysis of economic development in Vietnam. This study aims to reveal the characteristics of industrial clusters in terms of their participants and locations. The findings of the study may provide basic information for evaluating the effects of agglomeration and the robustness of the effects in the industrial clusters in Vietnam. Section 1 describes the characteristics of economic entities in Vietnam such as ownership, size of enterprise, and location. Section 2 examines qualitative aspects of industrial clusters identified in McCarty et al. [2005] and uses information on the size and ownership of clusters. Three key industries (garments, consumer electronics, and motor vehicle) are selected for the study. Section 3 identifies another type of cluster commonly seen in Vietnam, composed of local industries and called 'craft villages'. Many such villages have been developed since the early 1990s. The study points out that some of these villages have become industrialized (or are becoming industrialized) by introducing modern modes of production and by employing thousands of laborers.

A model of economic growth with saturating demand

This study presents a model of economic growth based on saturating demand, where the demand for a good has a certain maximum amount. In this model, the economy grows not only by the improvement in production efficiency in each sector, but also by the migration of production factors (labor in this model) from demand-saturated sectors to the non-saturated sector. It is assumed that the production of a brand-new good will begin after all the existing goods are demand-saturated. Hence, there are cycles where the production of a new good emerges followed by the demand saturation of that good. The model then predicts that should the growth rate be stable and positive in the long run, the above-mentioned cycle must become shorter over time. If the length of cycles is constant over time, the growth rate eventually approaches zero because the number of goods produced grows.

Development of broiler integration in Peru

Production and consumption of broiler meat has expanded rapidly in Peru since the 1990s. This rapid expansion was possible due to technological changes in production as well as integration of various stages of production, such as breeding farms, hatcheries, feed mills and grow-out farms by so-called broiler integrators. However, there are some distinguishing characteristics in Peruvian broiler integration that differ from those in developed countries. One is the truncated scope of integration, in which the slaughtering and processing stages are not integrated. The other is that not slaughtering and processing companies, but grow-out farms have become the principal broiler integrators. This paper analyzes the factors associated with these characteristics.

Production networks in the Asia-Pacific region : facts and policy implications

Production networks have been extensively developed in the Asia-Pacific region. This paper employs two micro-level approaches, case studies and econometric analysis, using JETRO's firm surveys which investigate Japanese affiliates operating in Southeast Asia. These two approaches found that production networks have extended, involving suppliers, across various nations in the Asia-Pacific region, and that production bases in host and home countries have different roles. A home country serves as a headquarters with services such as R&D, international marketing, and financing. A high tariff policy in a host country may foster domestic industries through the expansion of procurement from domestic suppliers, either indigenous or foreign, but it may discourage a country from becoming an export platform.

Formation of supply chain collaboration and firm performance in the Thai automotive and electronics industries

This paper examines factors that encourage firms to go into supply chain collaborations (SCC) and relationships between SCC and supply chain performances (SCP), using a questionnaire survey on Thai automotive and electronics industries in 2012. OLS regression results show firms established supplier evaluation and audit system, system of rewards for high-performance supplier and long-term transactions with their supply chain partners under a competitive pressure are more closely cooperate with these partners on information sharing and decision synchronization. Instrumental variables regression indicates SCC arisen from competitive pressure, supplier evaluation and audit, a system of rewards for high-performance supplier and long-term relationship causally influence SCP such as on-time delivery, responsiveness to fast procurement, flexibility to customer need, and profit.

Skill sorting and production chains : evidence from India

This study proposes a new mechanism that explains skill-sorting patterns and skill wage differentials across industries based on the length of the industry's production chain. A simple simultaneous production model shows that when the quality of intermediate inputs deteriorates rapidly along the production chains, high-skilled individuals choose to work in industries with shorter production chains because of higher returns to skill. I empirically confirm this skill-sorting pattern and these inter-industry skill wage differentials in India, where the quality of intermediate inputs is likely to degrade rapidly because of the high number of unskilled laborers, poor infrastructure, and less-advantaged technology. The results remain robust even when considering selection bias, alternative reasons for inter-industry skill wage differentials, and a different period. The results of this study have important implications when considering countries' industrial development patterns.