Kozo Kiyota

Computational Analysis of the US FTAs with Central America, Australia and Morocco

We use the Michigan Model of World Production and Trade to assess the economic effects of the US bilateral FTAs negotiated with Central America, Australia and Morocco. The model covers 18 economic sectors in each of 22 countries/regions and is based on version 5.4 of the GTAP database for 1997 together with specially constructed estimates of services barriers and other data on sectoral employment and numbers of firms. The distinguishing feature of the model is that it incorporates imperfect competition in the manufacturing and services sectors, including monopolistic competition, increasing returns and product variety. The modelling focus is on the effects of the bilateral removal of tariffs on agriculture and manufactures and services barriers. Rules of origin and other restrictive measures and the non-trade aspects of the FTAs are not taken into account due to data constraints. The computational results indicate that the benefits of bilateral FTAs for the United States and partner countries are rather small in both absolute and relative terms, and that far greater benefits could be realised if the United States and its FTA partners adopted unilateral free trade and especially if multilateral free trade was adopted by all countries/regions in the global trading system.

Are US Exports Different from China’s Exports? Evidence from Japan’s Imports

Are US exports different from China’s exports? If so, how? This article attempts to answer this question, using product-level manufacturing import data from Japan. To make the comparison clear, this article also examines exports from the EU. The results indicate that more than 85 per cent and 83 per cent of products exported by the US and the EU, respectively, to Japan are also commonly exported from China. Both the US and the EU export products are priced higher than China’s export products, regardless of industries. This result suggests that quality differences matter in explaining the high overlap of China’s export products with US and EU export products. In some industries, however, the price differences of US and EU exports relative to China’s exports are relatively small. This result implies that either Chinese firms are upgrading the quality of their products, or US and EU firms are improving their efficiencies such that they can compete with Chinese firms.

Exchange rate volatility and MNCs' production and distribution networks: The case of Japanese manufacturing MNCs

This paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.

Paths of Development and Wage Variations

In analyzing the relationship between factor endowments and sectoral per capita output (the paths of development), it was shown empirically that the number of cones was neither one nor three but two, and that all countries fall into one of these two cones. This is a puzzle, because it is inconsistent with large wage variations across economies. This paper attempts to solve this puzzle, introducing complete and incomplete specialization into a multiple‐cone model. Empirical results reveal that the two‐cone Heckscher–Ohlin (HO) model can be consistent with HO specialization and wage variations across economies.

Productivity Convergence at the Firm Level

Productivity convergence among countries has been investigated extensively with mixed results. This paper extends the analysis to the firm level to shed light on the debate of convergence or non-convergence. We find productivity convergence among firms widely in Japan, in both manufacturing industries and non-manufacturing ones. We obtain these results taking explicit account of exiting firms as a source of selection biases. The convergence rate is much faster among firms than countries. We also find that there are substantial differences among industries in the convergence speed. IT industries that heavily rely on technological progress show faster rates of convergence.

Firm‐Level Evidence on Productivity Differentials and Turnover in Vietnamese Manufacturing

This paper examines the relationship between productivity differentials and firm turnover in Vietnamese manufacturing. We utilize firm-level data between 2000 and 2009, including the year 2007, when Vietnam joined the World Trade Organization (WTO). Our major findings are twofold. First, the productivity of entrants, survivors, and exiters increased simultaneously from 2006 to 2007. This result suggests that the cutoff productivity level increased after trade liberalization. Second, the resource reallocation between firms was facilitated after the liberalization. These findings are consistent with the implications of the recent models of international trade and firm heterogeneity.

Industrial Policy Cuts Two Ways: Evidence from Cotton Spinning Firms in Japan, 1956–1964

A number of studies have revealed a negative effect of industrial policy on productivity growth. Is this because industrial policy fails to control the activities of firms or because it can effectively control them? This paper attempts to answer these questions, using firm-level data from the cotton-spinning industry in Japan for the period 1956–64. We determine that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton-spinning firms, which contributed to the establishment of a stable market structure during the period. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative productivity growth in large firms during this period, industrial policy resulted in negative productivity growth in the industry.

Industrial Upgrading in a Multiple-cone Heckscher–Ohlin Model: The Flying Geese Patterns of Industrial Development

This paper examines empirically how the multiple-cone version of the Heckscher–Ohlin (HO) model fits the “flying geese” patterns of industrial development: a series of industries appear, prosper, then decline and finally disappear one after another. Using Japanese manufacturing data from 1975 to 2006, the analysis shows that the multiple-cone model fits well with the flying geese patterns of Japanese industrial development. The result suggests that part of the industrial upgrading can be explained by the multiple-cone HO model. This also implies that an underlying mechanism of macroeconomic growth is industrial upgrading, part of which can be attributed to capital accumulation.

Why countries are so eager to establish bilateral free trade agreements: A case study of Thailand

PART I Theoretical framework and economic overview 1. Bilateral trade agreements in the Asia-Pacific by VINOD K. AGGARWAL 2. The political economy of the new Asia-Pacific bilateralism: benign, banal, or simply bad? by JOHN RAVENHILL 3. Bilateralism in the Asia-Pacific: an economic overview by FUKUNARI KIMURA PART II Case studies 4. Japan: a new move toward bilateral trade agreements by T.J. PEMPEL AND SHUJIRO URATA 5. US trade arrangements in the Asia-Pacific by RICHARD E. FEINBERG 6. Chinese trade bilateralism: politics still in command by ELAINE S. KWEI 7. From multilateralism to bilateralism? a shift in South Koreas trade strategy by MIN GYO KOO 8. Who rules the international economy? Taiwans daunting attempts at bilateralism by ROSELYN Y. HSUEH 9. Singapore trade bilateralism: a two track strategy by SEUNGJOO LEE 10. Why countries are so eager to establish bilateral free trade agreements: a case study of Thailand by KOZO KIYOTA 11. The reluctant bilateralist: Malaysias new trade strategy by YUMIKO OKAMOTO 12. Free trade beyond NAFTA: the economic and institutional rationale for Mexicos bilateral trade agenda by RALPH ESPACH PART III Conclusion 13. The evolution and implications of bilateral trade agreements in the Asia-Pacific by VINOD K. AGGARWAL AND MIN GYO KOO

Misallocation and Productivity: The Case of Vietnamese Manufacturing

This paper attempts to measure the effect of resource misallocation on aggregate manufacturing total factor productivity, focusing on Vietnamese manufacturing firms during the period 2000–2009. One of the major findings of this paper is that there would have been substantial improvement in aggregate total factor productivity in Viet Nam in the absence of distortions. The results imply that potential productivity gains from removing distortions in Vietnamese manufacturing are large. We also find that smaller firms tend to face advantageous distortions, while larger firms tend to face disadvantageous ones. Moreover, the efficient size distribution is more dispersed than the actual size distribution. These results suggest that Viet Nams policies may constrain its largest and most efficient producers, and coddle its smallest and least efficient ones.