3) Changing Production Networks in Asia
2010 Jul/Aug
COVER STORY: White Paper on International Economy & Trade 2010
By Junjiro SHINTAKU (Associate prof. of corporate strategy, Graduate School of Economics, Univ. of Tokyo)
Export Growth Lies behind Economic Boom Since the 1980s, Japan's manufacturing industries have relocated their production bases to overseas markets as a way of addressing trade disputes and a strong yen. The automobile industry has located production bases in its big markets (i.e., the United States and Europe) under a market-based production scheme. Of late, it has been rapidly expanding output in China. Meanwhile, the electrical/electronic industries have located mass-production bases largely in member states of the Association of Southeast Asian Nations (ASEAN) and China since the latter half of the 1980s under a cost-based production scheme. This transfer of manufacturing plants overseas has resulted in changes in Japan's trade structure. Chart shows the trends of Japan's total export values and the percentages of exports by region over the last decade. Since the end of World War II, Japan's exports have consistently grown in value. After a respite in the latter half of the 1990s, exports expanded steadily from 2002 onward, and in 2008 reached a record annual high of $775.9 billion. In 2009, exports plunged to $580.8 billion in the aftermath of the collapse of Lehman Brothers Inc. in September 2008, but they were still almost on a par with what they were in 2005 when the Japanese economy picked up. This means export growth lay behind Japan's booming economy. In the meantime, however, the fundamental structure of exports has dramatically changed from what it was until the 1980s. Japanese exports by region reveals that Japan's economic and trade patterns have changed steadily. Of the country's overall exports to the rest of the world, the United States accounted for 16% in 2009, down sharply from 30% in 1999. Also, the share of the European Union (EU) went down to 13% from 18%. By contrast, the ratio of Japan's exports to China grew to 24% from 11% during the same period, and those to South Korea and Taiwan edged up to 8% and 6%, respectively. Shift to Intermediate Goods in Exports The changes in Japan's export destinations have brought about shifts in its export goods. Of the country's exports to the United States, which used to be its largest export market, such durable consumer goods as automobiles take up 30-35%. As for exports to China, which is currently the biggest export market for Japan, raw materials for industrial products and capital goods have consistently made up 35% and 50%, respectively, over the last decade, with... <<BACK

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