Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 31, No. 3, pp.237-272
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2018
Received 21 Nov 2017 Revised 08 May 2018 Accepted 10 May 2018

Comparing Japan, the US, and China’s Roles in Trade Relationships with Emerging East Asian Countries during the Last Three Decades

Nahid Pourrostami ; Toru Yanagihara
Nahid Pourrostami, Faculty of World Studies, University of Tehran, Tehran, Iran, Tel: +98-21-8801-1304, Fax: +98-21-8801-1304 prostami@ut.ac.ir
Toru Yanagihara, Faculty of International Studies, University of Takushoku, Tokyo, Japan, Tel: +81-3-3334-8613, Fax: +81-3-3334-8613 yt_tic@yahoo.co.jp

JEL Classification: F14, C67, R12, D57

Abstract

The expansion of trade relationships among East Asian economies along with the high economic growth rate in these countries within the last three decades has demonstrated their accomplishment in transferring the benefits of trade into their economies and increasing their production capacities. The 1985 Plaza Accord and the revaluation of Japan’s yen, China’s transition over the last three decades, and the banking crisis in 1997 to 1998 are among the main events affecting the influence of Japan, the US, and China in East Asia. This study analyzes the pattern of trade relationships in the Emerging East Asian (EEA) economic network in the past three decades and the role of Japan, the US, and China in the region over the mentioned period. The analysis is based on the real data of Asian input–output tables from 1985 to 2005 while estimating those of 2012. The trend of the Leontief coefficients from1985 to 2012 illustrates that the concentration of suppliers has changed gradually due to the emergence of China, South Korea, and Taiwan as new regional suppliers in addition to Japan and the US since 2005. However, China, to some extent, has managed to outperform Japan and the US in the region. Determinants, such as Export-Platform Foreign Direct Investment (FDI) and the resulting knowledge and technology transfers, are analyzed as the drivers of the evolution of China’s role in the region. The Contribution Ratios (CR) of final demand of Japan and the US to EEA countries’ value added, have decreased during 1985 to 2012, whereas the CR of China has drastically increased during the same period.

The results corroborate that the share of export to the GDP index overestimates the share of external demands to the value added in EEA countries. This finding supports the notion that the total export is prone to double counting in East Asian economies.

Keywords:

Trade relationship, Contribution ratio, Leontief coefficient, Emerging East Asia, Export-platform FDI, Asian International Input–Output table

Acknowledgments

This work has been supported by the Center for International Scientific Studies & Collaboration (CISSC, Iran). We are also thankful of the respectable reviewers of Seoul Journal of Economics for their valuable comments.

References

  • Akamatsu, K. “A Historical Pattern of Economic Growth in Developing Countries.” The Developing Economies 1 (No. s1 1962): 3-25. [https://doi.org/10.1111/j.1746-1049.1962.tb00811.x]
  • Ameer, W. and H. Xu. “Relationship between Inward Foreign Direct Investment, Domestic Investment, Formal and Informal Institutions: Evidence from China.” Review of Innovation and Competitiveness: A Journal of Economic and Social Research 3 (No. 2 2017): 83-98. [https://doi.org/10.32728/ric.2017.32/5]
  • Anand, J. and A. Delios. “Competing Globally: How Japanese MNCs have matched Goals & Strategies in China and India.” The Columbia Journal of World Business 31 (No. 3 1996): 50-62. [https://doi.org/10.1016/S0022-5428(96)90040-X]
  • Baldwin, R. and T. Okubo. “Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates.” The World Economy 37 (No. 8 2014): 1051-1080. [https://doi.org/10.1111/twec.12116]
  • Baldwin, R. E. “The East Asian Noodle Bowl Syndrome.” In Daisuke Hiratsuka and Fukunari Kimura (eds.), East Asia’s Economic Integration, Progress and Benefit. London, UK: Palgrave Macmillan IDE-JETRO, pp. 45-78, 2008. [https://doi.org/10.1057/9780230227309_3]
  • Baltagi, Badi H., Peter Egger, and M. Pfaffermayr. “Estimating Models of Complex FDI: Are there Third-country Effects?” Journal of Econometrics 140 (No. 1 2007): 260-281. [https://doi.org/10.1016/j.jeconom.2006.09.009]
  • Barro, RJ and X. Sala-i-Martin. Convergence across States and Regions. Brooking Papers No. 1, 1991. [https://doi.org/10.2307/2534639]
  • Chowdhury, K. “What is happening to per capita GDP in the ASEAN Countries?” Applied Econometrics and International Development 5 (No. 3 2005): 49-68.
  • Dietzenbacher, E., L., I. Romero, and N. S. Bosma. “Using Propagation Lengths to Production Chain in the Andalusian Economy.” Estudios De Economfa Aplicada 23 (No. 2 2005): 405-422.
  • Dungey, Mardi and V. Tugrul. “The Influences of International Output Shocks from the US and China on ASEAN Economies.” Journal of Asian Economics 39 (2015): 59–71. [https://doi.org/10.1016/j.asieco.2015.05.003]
  • Ekholm, K., R. Forslid, and James R. Markusen. “Export-Platform Foreign Direct Investment.” Journal of the European Economic Association 5 (No. 4 2007): 776-795. [https://doi.org/10.1162/JEEA.2007.5.4.776]
  • Gabriele, Alberto. Science and Technology Policies, Industrial Reform and Technical Progress in China. UNCTAD/OSG/DP No. 155, 2001.
  • Goode, W. Dictionary of Trade Policy Terms. 4th ed., Cambridge University Press, 2003.
  • Helble, M. and B. Ngiang. “From Global Factory to Global Mall? East Asia’s Changing Trade Composition and Orientation.” Japan and the World Economy 39 (2016): 37-47. [https://doi.org/10.1016/j.japwor.2016.06.001]
  • Hiratsuka, D. and F. Kimura. “From De Facto to De Jure Economic Integration in East Asia: Past, Present and Future.” In Daisuke Hiratsuka and Fukunari Kimura. (eds.), East Asia’s Economic integration, Progress and Benefit. Palgrave Macmillan, IDEJETRO, pp. 1-22. 2008. [https://doi.org/10.1057/9780230227309_1]
  • Huang, X. The Rise and Fall of the East Asian Growth System 1951-2000: Institutional Competitiveness and Rapid Economic Growth. London and New York: Rutledge Curzon, 2005.
  • Inomata S. A. New Measurement for International Fragmentation of Production Process: an International Input-Output Approach IDE Discussion Paper No. 175, 2008.
  • Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). No.65 Asian International Input-Output Project. Statistical Data Series 1985, Japan, 1985.
  • Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). Statistical Data Series 1990, 1995, Japan, 2000.
  • Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). No. 98 Asian International Input-Output Table 2005. Statistical Data Series 2013, Japan, 2013.
  • Kang, Byeongwoo. “What Best transfers Knowledge? Capital, Goods, and Labor in East Asia.” Economics Letters 139 (No. C 2016): 69-71. [https://doi.org/10.1016/j.econlet.2015.12.004]
  • Kikuchi, T. “East Asian Regionalism: A Look at the “ASEAN Plus Three” Framework.”Japan Review of International Affairs 16 (No. 1 2002): 1-23.
  • Kimura, F. “Seeking Development Strategies: The Role of Government and ODA in Southeast Asia.” In H. Kohama (ed.), External Factors for Asian Development, Chapter 8, Vol 1, Japan: Institute of International Affairs and ASEAN Foundation, pp. 94-210, 2003. [https://doi.org/10.1355/9789812305329-012]
  • Kouhkan, A. “China’s Development Process After 1976.” Institute of Science and Cultural Studies, Rahavard Political Magazine 5 (No. 20 2008): 43-62. (in Persian)
  • Kuwamori, H., Y. Uchida, and C. Tamamura. Compilation of the 2005 Asian international Input-output Table. Institute of Development Economies, Japan External Trade Organization (IDE-JETRO), April, 2013.
  • Markusen, James R. Multinational Firms and the Theory of International Trade. Munich Personal RePEc Archive Paper No. 8380, 2002. [https://doi.org/10.7551/mitpress/4797.001.0001]
  • Meng, B. and S. Inomata. “Production Network and Spatial Economic Interdependence: An International Input-output Analysis of the Asia-pacific Region.” Institute of Development Economies Discussion Papers No. 185, 2009.
  • Meng, B., Y. Zhang, and S. Inomata. “Compilation and Application of IDE-JETRO’s International Input-Output Tables.” IDE Discussion paper No. 375, pp. 1-45, 2013. [https://doi.org/10.1080/09535314.2012.761597]
  • Mori, T. and H. Sasaki. Interdependence of Production and Income in Asia-Pacific Economies: An International Input-Output Approach. Bank of Japan Working Paper No. 07-E-26. Bank of Japan, 2007.
  • Naghizadeh, M. Toward the 21st Century; the Japanese Economy and Economic Development of Asian Countries. Tehran: Enteshar Publication Co., 1998. (in Persian)
  • Okubo, T., F. Kimura, and N. Teshima. “Asian Fragmentation in the Global Financial Crisis.” International Review of Economics and Finance 31 (2014): 114-127. [https://doi.org/10.1016/j.iref.2014.01.001]
  • Ozawa, T. The Classical Origins of Akamatsu’s “Flying-Geese” Theory: A Note on a Missing Link to David Hume. Center on Japanese Economy and Business Working Papers No. 320, New York: Columbia Business School, 2013.
  • Pula, G. and T.A. Peltonen. Has emerging Asia Decoupled? An Analysis of Production and Trade Linkages Using the Asian International Input-Output Table. European Central Bank Working Paper Series No 993, 2009.
  • Pula, G. and T.A. Peltonen. “Chapter 11 has emerging Asia decoupled? An Analysis of Production and Trade Linkages Using the Asian International Input–Output Table.” In Y. Cheung, V. Kakkar, and G. Ma (eds.), The Evolving Role of Asia in Global Finance. Emerald Group Publishing Limited, pp. 255-286, 2011. [https://doi.org/10.1108/S1574-8715(2011)0000009016]
  • Sally, R. “Trade Policy in Asia: Where Next with a Crippled WTO and Weak FTAs?” ECIPE POLICY BRIEFS No. 01, 2007.
  • Schmidt, D. “The Financial Crisis and its Impact on China.” In S. Heilmann (ed.), China Analysis 67, Germany: Trier University, pp. 1-4, 2009.
  • Soderberg, M. “Asia as Seen from the Perspective of Japanese General Trading Houses.” In M. Soderberg and I. Reader (eds), Japanese Influences and Presences in Asia. Chapter 4, New York, U.S.: Curzon Press, pp. 101-117, 2000.
  • Stiglitz, E. J. Globalization and Its Discontents. London, U.K.: Penguin Books, 2002.
  • Sun, P. and A. Heshmati. International Trade and Its Effects on Economic Growth in China. IZA Discussion Papers No. 5151, 2010.
  • Thorbecke, W. “China–S trade: A Global Outlier.” Journal of Asian Economics 40 (2015): 47–58. [https://doi.org/10.1016/j.asieco.2015.09.001]
  • Tolentino, P. Estrella. Technological Innovation and Third World Multinationals. London and New York: Routledge, March, 1993.
  • Xu, M. “The Role of Macroeconomic Policy in China’s High Economic Growth amidst the Global Financial Crisis.” Seoul Journal of Economics 23 (No. 1 2010): 123-144.
  • Yamada, T., Y. Yoshizakia, N. Itsubob, and M. Inouec. “Low-carbon and Economic Supplier Selection Using Life Cycle Inventory Database by Asian International Input-Output Tables.” Procedia CIRP 26 (2015): 317-322. [https://doi.org/10.1016/j.procir.2014.07.159]
  • Yoshida, T. East Asian Regionalism and Japan. Institute of Developing Economies APEC Study Center Working Paper Series 03/04 No. 9, 2004.