Export strategies in the computer industry: Japan and the USA

Japan's computer manufacturers realize that they need more than a new generation of software (or hardware) for success in world markets. The missing ingredients are primarily multinational busines experience factors, which have worked to the past advantage of US companies. Japan's past export successes — textiles, steel, consumer electronics—have come with products that, unlike computers, could be sold through existing distribution channels. Realizing their disadvantages in selling computer systems worldwide, the Japanese designed the heavily publicized fifth-generation project seeking technology that could serve as a wedge into markets where US-based multinationals had already become firmly entrenched. For this as for other joint government-industry R&D projects in Japan, the indirect effects will be at least as important as the technological outcomes; asking whether the fifth-generation project could have reached particular technical objectives poses the wrong question. In terms of technological capability, Japan could emerge as a formidable rival of the USA in world computer markets. Given the international presence of US companies large and small, this will not be as quick or as easy as in other Japanese export industries: Japan will continue to have far more difficulty exporting computer systems than VCRs or integrated circuits.     

Innovation Policy in Search of an Economic Foundation: The Case of Research Partnerships in the United States

US- owned firms account for more than 60% of worldwide computer software sales, and US capability in software tachnology is widely viewed as well ahead of that in other countries. However, the US lead cannot be expected to last. Nor are policies yet in place intended to protect exisitng advantages. Japanese firms have demonstrated their capabilities in hardware. Japanese firms have demonstrated their capabilities in hardware. Japanses exxecutives know they must develop better software in order (1) to use their own computer systems to best advantge, and (2) to sell more hardware in export markets. The next several devades will see a gradual slippage in the US position, particularly as foreign software suppliers move away from custom programming an realted services, their present focuse. A narrowing gap between US and foreign industries could prefigure a competitive challenge in software, development not unlike earlier challenges in microelectronics. Better software,. in addition, will have impacts elsewhere.In Japan's case, for example, improvements in softwarte should lead to productivity enhancements throughout the economy, improving Japan's ability to tmpete internationally.     

ARE JAPANESE INVESTORS TAKING THEIR MONEY HOME?

Only recently has Japan become the world's largest investor. Yet stories of investors taking their money home already have developed. Are Japanese investors taking their money home? Would it matter? To answer these questions, one must examine the economic, regulatory, and political motivations guiding Japanese investments. So far, shifts in the flows of funds have not been sensational, but by no means should one dismiss the shifts as irrelevant. A tightening of liquidity at home and a pricking of the bubble's in Japan's equity and land markets have altered the calculus of returns on overseas investments. Tims, the annual increments to Japan's overseas holdings, which already had shrunk in 1990, should stay low in the coming years. Tlie impact on global financial markets will depend crucially on whether new flows from Japan fall faster than new demands for funds outside of Japan.     

The United States and United Kingdom activities of Japanese banks, 1980–1988

This paper analyzes the United States and United Kingdom activities of Japanese banks by integrating their activities in these two markets with the regulatory environment for banks in Japan and Japan's overall external financial position, as well as with business opportunities in the two host countries. The paper concludes that the regulatory environment in Japan, including restraints on interest rates and possible quantitative restraints, has had an impact on activities of Japanese banks in these two foreign markets.Japanese banks appear to have adjusted to their domestic regulatory environment by using their London branches as a flexible funding source and their U.S. offices in extending commercial and industrial loans to Japan-based companies as well as a substitute location for interbank trading. In both markets Japanese banking offices are large net barrowers from unrelated banks because of constraints on raising funds in their homer market.     

Cutting-sdge technologies computer software: strategic industry

US- owned firms account for more than 60% of worldwide computer software sales, and US capability in software tachnology is widely viewed as well ahead of that in other countries. However, the US lead cannot be expected to last. Nor are policies yet in place intended to protect exisitng advantages. Japanese firms have demonstrated their capabilities in hardware. Japanese firms have demonstrated their capabilities in hardware. Japanses exxecutives know they must develop better software in order (1) to use their own computer systems to best advantge, and (2) to sell more hardware in export markets. The next several devades will see a gradual slippage in the US position, particularly as foreign software suppliers move away from custom programming an realted services, their present focuse. A narrowing gap between US and foreign industries could prefigure a competitive challenge in software, development not unlike earlier challenges in microelectronics. Better software,. in addition, will have impacts elsewhere.In Japan's case, for example, improvements in softwarte should lead to productivity enhancements throughout the economy, improving Japan's ability to tmpete internationally.     

How integrated are real estate markets with the world market? Evidence from case-wise bootstrap analysis

We investigate the extent by which real estate markets are integrated with the world market. We apply a case-wise bootstrap analysis — a method that is robust to non-normality and increased volatility that characterises financial markets, especially during periods of distress. We also take into account the effect of the global financial crisis. Our investigation is conducted in relation to five most important and highly internationalised real estate markets, namely, the US, UK, Japan, Australia and the United Arab Emirates (UAE). We find that the first four markets are integrated with the world market — with Japan, the US, and the UK being the most integrated, but the last one is not. Our results also show that the US real estate market crisis affected the five markets differently. It made the UAE, Australia and the US real estate markets more integrated internationally but resulted in the Japanese market becoming less globally integrated. In the case of the UK, the crisis did not affect at all its level of integration with the world market.     

Revisiting the Roots of Japan's Economic Stagnation: The role of the Japanese corporation

For a long period in the 20th century, the development of the Japanese corporation appeared congruent with the development of the Japanese economy. The growth-maximising behaviour of the Japanese corporation and the preference for internal growth over acquisitions (see Odagiri, 1992) appeared to suit the long-term ambitions of Japan. Now, that formerly clear connection between the ambitions of corporate Japan and the Japanese public interest is no longer so clear. Increasingly, the global ambitions of the corporation appear as an impediment to Japan's economic development. By favouring the development of large-scale transnational corporations, Japanese industrial policy-making appears to have contained a fundamental flaw. Japan is now dominated by large-scale organisations with global ambitions, controlled by corporate elites. It is unlikely that their strategic decisions will correspond with the wider public interest, which raises the possibility that Japan is now afflicted with 'strategic failure'. Other examples from around the world suggest that Japan is not unique in this respect. Alternative ways forward are suggested.     

US Hegemony and the Origins of Japanese Nuclear Power: The Politics of Consent

This paper deploys the Gramscian concepts of hegemony and consent in order to explore the process whereby nuclear power was brought to Japan. The core argument is that nuclear power was brought to Japan as a consequence of US hegemony. Rather than a simple manifestation of one state exerting material ‘power over' another, bringing nuclear power to Japan involved a series of compromises worked out within and between state and civil society in both Japan and the USA. Ideologies of nationalism, imperialism and modernity underpinned the process, coalescing in post-war debates about the future trajectory of Japanese society, Japan's Cold War alliance with the USA and the role of nuclear power in both. Consent to nuclear power was secured through the generation of a psychological state in the public mind combining the fear of nuclear attack and the hope of unlimited consumption in a nuclear-fuelled post-modern world.     

Aiding regional instability? The geopolitical paradox of Japanese development assistance to China

During the past decade, Japan established itself as the largest bilateral donor of development aid in the world, with more of it directed toward projects in China than any other recipient. Japan sees its aid flows to China as maintaining economic stability in East Asia, particularly as China's raw material and energy resources are articulated into regional markets. In this article, I argue that Japan's aid to China may unintentionally diminish Japan's and the East Asian region's long‐term security for two reasons. First, similar to other nations receiving such assistance, this aid may allow China to reallocate scarce capital to military modernisation. Such military modernisation may enable China to both better suppress internal dissent and carry out a more aggressive foreign policy. Second, this aid does not address the fundamental structural aspects of China's present instability. Long‐term structural instability has many sources, but the two discussed here are socio‐economic inequality (both interregional and intraregional), and sustainable production and environmental problems. Taken together these have important regional and geopolitical implications and repercussions. This article fills a gap in the existing literature on East Asian geopolitics. Namely, that by attending only to relatively short‐term corporate and perceived state interests of China and Japan, Japanese aid to China does little to ameliorate and potentially exacerbates long‐term structural social and environmental problems for China's vast majority living in rural hinterlands. The potential for internal turmoil springing from this uneven and unsustainable development inside China is the real basis for China's ‘threat’ to East Asian security. Thus what appears to make good development and geopolitical sense at first look, Japan's current aid regime with China, paradoxically may actually be the worst path to follow.     

The Question of Access to the Japanese Market*

It is now widely accepted that Japan has relatively low official barriers to merchandise, particularly manufactured goods, trade relative to other industrial countries. Yet, Japan's current account and trade surpluses have encouraged the view that there must be special ‘hidden barriers’ to accessing the Japanese market, and a literature has developed on the premise that Japanese business organizations (keiretsu) limit foreign penetration of markets of manufactured goods. This paper surveys the main elements of this literature and questions some of the assumptions upon which recent American policy in this area seems to have been developed.     

Abenomics and Japan's Trade Policy in a New Era

Trade policy, in particular, the Trans‐Pacific Partnership Agreement (TPP), has been a centerpiece of the Abe administration's economic strategy. The TPP's contributions to Japan's growth strategy include: (i) creating trade and investment opportunities abroad for Japanese companies through ambitious liberalization targets; (ii) advancing domestic reforms – with the largest service and agricultural liberalization commitments to date; and (iii) increasing bargaining leverage in other trade negotiations. But the domestic reform goals of Abenomics in agriculture have come up short due to opposition from domestic lobbies. American trade politics – which culminated in the US withdrawal from the TPP – have upended the goals of trade policy under Abenomics. Japan's best option in this new environment is to deliver on high quality, multi‐party trade agreements: concluding negotiations with Europe; scaling up the ambition of Regional Comprehensive Economic Partnership; and salvaging a TPP 11. The merits of a bilateral free trade agreement with the USA will depend on how the Trump administration operationalizes its America First policy.     

The Role of Multinational Corporations and National States in the Globalization of Innovatory Capacity: The European Perspective

The recent ability of multinational corporations (MNCs) to develop integrated technological networks, increasingly motivated within Europe by the further progress of economic integration, is argued to affect and be affected by national technological competitiveness. This paper examines the precise geographical dispersion of technological activity in Europe by the largest MNCs, and the potential impact of those MNCs on the level and structure of the technological capacity of European home and host countries, using data on patents granted to the world largest firms in the US. Since the late 1980s, the majority of the technological activity conducted in foreign-owned research facilities located in Europe, has taken place in affiliates of European-owned companies. This paper examines whether the much higher degree of internationalization of corporate technology in European MNCs than in their US or Japanese counterparts is attributable to cross-border activity within Europe, or extends to European-owned research facilities in the US and Japan. While intra-European activity matters more for Dutch, Belgian and Swedish MNCs (and in the electrical equipment and computing industries), whose strategies are substantially based on corporate European integration, investments in the US are of greater significance for French and Swiss companies, and of the greatest importance for German and British firms (and in the chemical and pharmaceutical industries), representing a more widely ‘globalized’ technological strategy.     

World Exports of New and Used Automobiles: A Gravity Model Comparison among the European Union,Japan and the United States

This paper considers new and used automobile exports of the European Union, Japan and the United States within a gravity model framework. This standard framework has similar explanatory power for the new and used automobile exports of the European Union and the United States, as well as for the new automobile exports of Japan, but not for Japan's used automobile exports, a finding the paper associates with the importance of left-hand driving in determining the markets for Japan's used (but not ‘made to order’ new) automobile exports. The paper concludes that, while used automobiles are somewhat more important to lower income markets, controlling for discrimination and other factors, used automobile trade clearly supplements new automobile trade from the prospective of the importing country.     

The Role of Multinational Corporations and National States in the Globalization of Innovatory Capacity: The European Perspective

The recent ability of multinational corporations (MNCs) to develop integrated technological networks, increasingly motivated within Europe by the further progress of economic integration, is argued to affect and be affected by national technological competitiveness. This paper examines the precise geographical dispersion of technological activity in Europe by the largest MNCs, and the potential impact of those MNCs on the level and structure of the technological capacity of European home and host countries, using data on patents granted to the world largest firms in the US. Since the late 1980s, the majority of the technological activity conducted in foreign-owned research facilities located in Europe, has taken place in affiliates of European-owned companies. This paper examines whether the much higher degree of internationalization of corporate technology in European MNCs than in their US or Japanese counterparts is attributable to cross-border activity within Europe, or extends to European-owned research facilities in the US and Japan. While intra-European activity matters more for Dutch, Belgian and Swedish MNCs (and in the electrical equipment and computing industries), whose strategies are substantially based on corporate European integration, investments in the US are of greater significance for French and Swiss companies, and of the greatest importance for German and British firms (and in the chemical and pharmaceutical industries), representing a more widely 'globalized' technological strategy.     

Pricing in International Markets: a "Small-country" Benchmark

The paper studies export pricing to market (PTM) in a “small‐country” context using a panel of disaggregated exports from Hong Kong since 1992. Conventional wisdom is that PTM is commonplace—except for US exports. This study provides a benchmark by which to interpret the puzzling behavior of US export prices. Empirically, Hong Kong's export price behavior is comparable to that of the US. This similarity reinforces the idea that PTM behavior is also a function of home market conditions and the ability to price discriminate across markets. There is little evidence of differences in PTM across Hong Kong's export destinations.     

US–Japan Trade Frictions: The Past,the Present,and Implications for the US–China Trade War

The United States and Japan have been involved in trade frictions over a number of products including textiles, steel, automobiles, semi‐conductors, and agricultural products over the last 50 years. US–Japan trade frictions have taken basically two forms: (i) the United States attempting to restrict Japan's exports to the United States; and (ii) the United States attempting to increase its exports to Japan by “opening” the Japanese market. By putting pressure on Japan to adopt necessary measures, the United States sought to achieve two main objectives: (i) to reduce its trade deficit vis‐à‐vis Japan; and (ii) to protect and/or promote US industries. The United States failed to achieve the first objective, while some success was achieved for the second objective. The United States triggered a trade war against China with the objectives of: (i) reducing the bilateral trade deficit; and (ii) stopping unfair trade practices by Chinese firms such as violations of intellectual property rights and forced technology transfer. Based on the experiences from the US–Japan trade frictions, the United States may achieve some success for the second objective, but not for the first. The chances of achieving the second objective would increase if the United States cooperates with countries such as Japan and the European Union, which are faced with similar problems.     

Crop failure,price regulation,and emergency imports of Japan's rice sector in 1993

In 1993, an extraordinarily cool summer in Japan brought about low rice yields, which caused considerable disturbances to the rice markets. Japan imported a large amount of rice as an emergency measure. Two controversies about Japan's rice policies were raised, particularly in that period. The first centred on the effectiveness of the price regulation policies in stabilizing rice prices and farmers’?incomes. The second involved the newspapers’?arguments that the emergency imports harmed other countries, especially developing countries. These controversies were examined with a world trade computable general equilibrium model.     

The Impacts of Japanese and US Outsourcing on Chinese Firms

This paper investigates the impact of manufacturing outsourcing to China from its two biggest trading partners—the USA and Japan, for the period of 1990–2008. Both a fundamental model and an augmented model are established, using export data of intermediate goods and two subcategories, processed goods and parts and components (P&C). We find that output growth is positively correlated with outsourcing, and outsourcing from the USA and Japan exerts lower effects than the average level. Our results show that Chinese outsourcees not only access higher productivity than their domestic non‐outsourcee counterparts, but also generate spillover effects to the non‐outsourcees. Moreover, outsourcees of Japanese multinational corporations (MNCs) gain more technological advantage while outsourcees of US origin act as a more effective external stimulus to increase production of non‐outsourcees in China.     

Gains and losses from potential bilateral US–China trade retaliation

Two closely related numerical general equilibrium models of world trade are used to analyze the potential consequences of US–China bilateral retaliation on trade flows and welfare. One is a conventional Armington trade model with five regions, the US, China, EU, Japan and the Rest of the World, and calibrated to a global 2009 micro consistent data set. The other is a modified version of this model with monetary non-neutrals and including China's trade surplus as an endogenous variable.Who may gain or loss from global trade conflicts spawned by adjustment pressures in the post crisis world is much debated. In a US–China trade conflict, Europe and Japan would seem gainers from preferential access to US and Chinese markets. The loss of markets would hurt the US, but moving closer to an optimal tariff could be the source of terms of trade gains. And the ease of substitution across trading partners' practices would determine costs for China.Results from the conventional model suggest that retaliation between the two countries can be welfare improving for the US as it substitutes expenditures into own goods and improve its terms of trade with non-retaliatory regions, while China and non-retaliatory regions may be adversely affected. Results in the endogenous trade surplus model from the central case model specification, however, suggest that both the US and the EU (the deficit regions) have welfare losses in most cases, while the surplus region, China, and the ROW have welfare gains. In both models, when the bilateral tariff rates are very high, gains accrue to the EU and Japan from trade diversion if the substitutions elasticities of imports are high. Costs are borne by the US and China in lost exports, lowered terms of trade and adjustment costs at home.     

COMMENT ‘A “NEWS” VIEW OF JAPAN'S LOST DECADE’: MONETARY POLICY DURING JAPAN'S LOST DECADE*

In this comment, I first propose a discussion of Braun and Waki's “Monetary Policy during Japan's Lost Decade” paper, by examining their model properties following a technological surprise. I then propose some empirical evidence suggesting that the Japanese lost decade could have been triggered by a downward revision of future TFP growth rather by an unexpected TFP slowdown. I show that a plain RBC model is unable to account for the effect of such a revision in expectation, while a sticky price model along the lines of Braun and Waki, or a flex‐price model with a rich sectorial structure, give more realistic predictions. These results favour a “News” view of the 1990s in Japan. Indeed, a downwards revision of future TFP growth expectations act as a demand shock in the short term, while the actual slowdown acts as a supply shock in the medium and long term.