Tadashi Ito

Using the Japanese firm/establishment-level census data, we investigate the impact of the Chinese import penetration on employment in Japan. We found negative impacts of the Chinese import penetration on total employment, especially in industries producing competing products to Chinese imports, and a positive impact of the import penetration in the industries from which firms purchase their inputs (upstream import penetration). The negative impacts are mainly driven by firms’ exit from the market while positive impacts are enjoyed by surviving firms. We did not find any significant impacts of the penetration in the industries to which firms sell their products (downstream penetration).

Many studies have investigated the impact of imports, especially those from China, on the domestic labor market. In this paper, we empirically examine the effects of not only imports from China but also those from regional trade agreement (RTA) partners on employment in Japan. To this end, we decomposed the total import penetration into the import penetration under the most favored nation (MFN) and RTA regimes. To address the endogeneity concern on our import penetration variables, we estimated our models by the instrumental variable method. As in previous studies in the literature, we found that the rise in import penetration from China significantly decreases employment in Japan. In contrast, import penetration under the RTA regime is found to have significantly positive effects on employment. The increase in imports under RTA regimes is not harmful to the domestic labor market.

This paper examines the impact of local procurement on the performance of foreign-owned firms. Using a unique survey of Japanese overseas affiliates suitable to this end, the authors show that the increase of local procurement improves Japanese affiliates' performance, but these positive effects are observed only in the case of procuring inputs from other Japanese affiliates in their host country, not in the case of procurement from indigenous firms.

This paper presents the novel finding that, in contrast to what the previous literature has shown, two-way intra-industry trade (IIT) in product-country pairs, when looked from a dynamic perspective, is very unstable by using disaggregated trade data of OECD countries. Many products frequently switch among two-way, one-way and zero trade over time. To measure the stability of two-way trade, we propose a measure that we refer to as the "IIT stability index". Our estimation results using the proposed measure show that two-way trade involving markets of different sizes and long distance are likely to be unstable and primary products are more unstable than manufactured products. (C) 2017 Elsevier Inc. All rights reserved.

In this study, we argue that the conventional intra-industry trade (IIT) index does not directly address the quality issue 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 change 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 [Rodrik, D (2006). Whats so special about China's exports? China and World Economy, 14(5), 1-19.] and Schott [Schott, P (2008). The Relative sophistication of Chinese exports. Economic Policy, 53, 5-49.]. Our results support Xu [Xu, B (2010). The sophistication of exports: Is China special? China Economic Review, 21(3), 482-493.], 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 [Rodrik, D (2006). Whats so special about China's exports? China and World Economy, 14(5), 1-19.].

This paper examines the effects of a common currency on the quality of traded goods. For this purpose, we construct a quality-based heterogeneous firm trade model to incorporate the formation of currency unions and the ensuing elimination of exchange rate volatility. Our main hypothesis is that a common currency enables low-quality (low marginal cost) firms to commence exporting to the common currency's member countries, which causes the average export price to fall. We empirically test this hypothesis for the euro and the eurozone using Harmonized System 8-digit traded product data for European Union countries.

This study uses the most disaggregated tariff line-level trade data in a large number of countries in the world to empirically decompose the trade creation effects of regional trade agreements (RTAs) into those owing to tariff reduction and those owing to non-tariff barrier (NTB) removal. Specifically, utilizing our detailed dataset, we employ the standard gravity equationand identify those effects by estimating the trade creation effects of RTAs for ineligible and eligible products for RTA preferential schemes separately. Our major findings are as follows. First, for the whole sample, there are significantly positive trade creation effects owing to tariff reduction while the effects for NTB removal are weak. Second, the trade creation effects of tariff reduction and NTB removal are substantially large in the case of trade among low-income countries but weak among high-income countries.

This study contributes to the literature on the impact of managerial structure on firms' productivity, considering the trade-off between local managers and expatriate managers. It employs data on Korean-origin foreign direct investment and first finds that the local manager ratio is associated with productivity improvements in uncertain business environments (developing countries) but not in stable and predictable business environments (developed countries). Second, this study finds that the local manager ratio is associated with raised firm productivity only in less research and developmentintensive industries. Policy implications are drawn from these findings.

Unlike the conventional theoretical approach explaining tourism demand by various kinds of determinants, this paper proposes a model in which probabilistic behavior explains the dynamics of the number of tourists. More specifically, the model assumes two different probabilities: one for first-time travelers and another for frequent travelers. This paper empirically examines the dynamics of tourists to Okinawa, Japan. While income and transport costs explain the probability of first-time visitors, they do not explain the probability of returning visitors however, congestion index, which reflects the busy lifestyle of larger cities, does. This suggests that tourism policy should differ depending on how mature or well established a location is as a tourist destination. Given that Okinawa is acknowledged as the foremost resort destination among Japanese, the priority for resource allocation of tourism promotion should focus on the preservation of the natural environment and original culture, thereby offering a unique experience to visitors.

This paper discusses some new evidence on intra-industry trade (IIT). In particular, we focus on EU trade with Eastern European countries, using trade data at the harmonised commodity description and coding system (HS) eight-digit product level for the period 1988-2010. Our findings include Eastern European countries rise up the quality ladder, and by contrast, the substantially lower prices of Chinas exports to EU countries vis-a-vis Chinas imports from them. The contrast between EU trade with Eastern European countries and with China is present even in recent years.

This paper revisits the question of whether NAFTA contributed to the productivity convergence between Mexico and the US. It introduces improved procedures for generating total factor productivity (TFP) data and applies new and more appropriate econometric methods. With these refinements, the paper provides some counter-evidence to the previous literature's findings of technology convergence toward a smaller gap level and NAFTA's positive effect on it. Our main result suggests an increasing TFP gap level, while some robustness checks, although not documenting increasing gaps, weaken the claim of the previous literature. The paper also applies a difference-in-difference approach and finds no evidence of sizeable effects of NAFTA.