Revisiting the role of service for manufacturing firm exports: Evidence from Japanese firm-level data

This paper examines productivity and returns to scale under the assumption of monopolistic competition using Japanese firm-level data. Although differentiating products (services) is considered important in firms’ strategies and productivity growth, it has not been sufficiently investigated in previous studies. In this paper, we study this issue in two retail trade industries, department stores and supermarkets, applying the model of Melitz (2000). Our results indicate that the standard production function is not relevant to estimate productivity in imperfectly competitive markets. It also suggests that the market structure should be carefully considered in productivity analysis. In addition, product differentiation has a positive effect on firms’ revenue for the supermarkets. Furthermore, the retail trade industries possibly follow increasing returns to scale. Thus, policy measures that promote economies of scale and product differentiation should contribute to further growth in these industries. In addition, the results indicate that the regulatory reform of the retail trade industry in 2000 increased the gap between winners and losers in terms of productivity.

The empirical literature examining aggregate data has generally found small or insignificant effects of rate fluctuations on export volumes. This lack of association between real quantities, such as export volumes and the rate is the so-called exchange rate disconnect puzzle. Using firm level data, however, the relationship between export volumes and rates turns to significantly negative. This paper attempts to reconcile these aggregate and firm level findings, using firm level data from Japan. We estimate a simple microeconomic model of exports to show that an appreciation of the rate reduces export volumes at the firm level. After consistent aggregation, the relationship still remains significant at aggregate levels. However, we show that the omission of some key productivity variables, or ignoring the distributions of heterogeneous firm level characteristics biases the elasticity of exports to rates toward zero.

How do exporters respond to exogenous shocks: Evidence from Japanese firm-level data

Using Japanese …rm data covering the Japanese …nancial crisis in the early 1990s, we …nd that exporters' domestic sales declined more signi…cantly than their foreign sales, which in turn declined more signi…cantly than non-exporters' sales.This stylized fact provides a new litmus test for di¤erent theories proposed in the literature to explain the "great trade collapse" associated with the recent global …nancial crisis.In this paper we embed the Melitz's (2003) model into a tractable DSGE framework with incomplete …nancial markets and endogenous credit allocation to explain both the Japanese data and the "great trade collapse."The model highlights the role of credit reallocation between non-exporters and exporters as the main mechanism in explaining exporters' behaviors and trade collapse following a …nancial crisis.

This paper aims to examine the relationship between the location choices of multinational enterprises and their productivity considering the North–South differences in regard to technological constraints. We find that home firms with the highest level of productivity choose to undertake foreign direct investment (FDI) in the developed countries and they choose to export to, rather than do FDI in, developing countries. This result explains why not many high tech industries exist in developing countries. Using Japanese firm level data, we also confirm that Japanese high tech firms tend to undertake FDI in developed countries, but hesitate to invest in developing countries empirically.

This paper presents the theoretical framework and empirical analysis of the effect of stronger Intellectual Property Rights (IPRs) on technology transfer from parent firm to its subsidiaries in foreign countries. The results of empirical testing, based on the firm-level panel data of Japanese MNCs’ foreign subsidiaries, show that the stronger protection of IPRs has a positive effect on the promotion of intra-firm technology transfer after controlling for market specific factors in the host countries as well as parent-subsidiary firm specific factors. They are consistent with our theoretical prediction and the results of the previous studies based on US firm-level data.

We examine the effects of shocks to aggregate productivity, foreign output demand, government expenditures, and demand for foreign liquidity on dynamics of products and exports of heterogeneous firms. The framework is motivated by open economy general equilibrium models of Bilbie, Ghironi and Melitz (2012) and Dekle, Jeong and Kiyotaki (2014). We first construct unique firm level data on products and exports from the Census of Manufactures conducted by the Ministry of Economy, Trade and Industry. The data are more disaggregated than comparable U.S. data and available at the annual frequency (while U.S. product level data are only available at five-year intervals), which makes our data more suitable for examining the interaction between the business cycle and firm-product heterogeneity. Our empirical results show that the development of new products is stimulated by improvements in not only firm level productivity but also aggregate productivity. We also find that an increase in foreign demand and a shock to depreciate the home real exchange rate increase product dynamics and exports.

Measuring economic localization: Evidence from Japanese firm-level data

Empirical analyses of offshoring based on Japanese firm-level data:A survey

Exploring the relationship between development aid and FDI from developed countries in developing countries: empirical insights from Japanese firm-level data

This paper, using Japanese firm-level data, presents findings about innovative activities in the service sector and the role of patents and trade secrets on innovation. According to the analysis, first, service firms have fewer product innovations than do manufacturing firms, but the productivity of innovative service firms is very high. Second, service firms have a low propensity for holding patents, but their holding of trade secrets is comparable to that of the manufacturing firms. Third, patents and trade secrets have positive relationships with product innovations, and the effects are quantitatively similar in magnitude in both the manufacturing and the service sectors. On the other hand, a positive relationship between trade secrets and process innovations is found only in the manufacturing sector. These results suggest a pivotal role of the law protecting trade secrets on innovation and productivity growth in the service sector.

Globalization, firm-level characteristics and environmental management: A study of Japan

This chapter examines whether and how the entry of foreign multinational firms affects productivity growth of domestically owned firms, using Japanese firm-level data. The data are taken from a comprehensive annual survey conducted by the Japanese government on firms in manufacturing, wholesale, retail, information services, business services, and other service industries. The results of the analysis suggest that foreign multinationals perform better than domestically owned firms in many sectors. Moreover, once firm-specific fixed effects are controlled for, the presence of foreign firms in an industry tends to negatively affect the productivity growth rate of domestically owned firms in that industry. However, firms that are catching up toward the productivity frontier enjoy positive foreign direct investment spillovers, implying that foreign entry accelerates productivity catch-up.

This article clarifies the reasons for the recent rapid growth of foreign direct investment (FDI) in developing countries, particularly Asian countries. For this purpose, we theoretically and empirically examine the mechanics of both horizontal FDI and vertical FDI (VFDI) to shed light on the role of trade costs. Our empirical analysis using a logit or multinomial logit model of Japanese firms’ FDI choices reveals that the tariff reduction in Asian countries has lowered the productivity cutoff for VFDI. This result indicates that since developing countries, particularly Asian countries, have experienced a relatively rapid decrease in tariff rates, the increase in VFDI through tariff reduction led to the recent surge of FDI in developing countries.

ABSTRACTWe investigate the situation where small business borrowers and banks end their lending relationships. If credit allocation is efficient, banks terminate their relationships with risky borrowers. Alternatively, small business borrowers are more likely to end their relationships when they have poor investment opportunities and do not require borrowed funds. However, if the soft budget constraints of banks or credit crunches are a significant problem, banks are likely to continue their relationships with risky firms or end their relationships with nonrisky firms, which is representative of an unnatural credit allocation. Using Japanese firm-level data, we show empirically that these relationships end naturally, with natural credit allocation supported even during the recent global financial crisis.