Lim, Sokchea and Khun, Channary (2010): U.S. Bilateral Trade Deficits with China and Japan: The Role of Japanese Direct Investment. Published in: The Empirical Economics Letters , Vol. 10, No. 6 (June 2011): pp. 527-534.
Download (736kB) | Preview
This paper argues that Japanese Foreign Direct Investment (FDI) in China plays a critical role in home and host country’s bilateral trade imbalances with the U.S. Using six cross-sectional panel data from 1981 to 2007, we find strong evidence in support of the role of Japanese FDI in mounting U.S.-China trade imbalance and in reducing deficit of U.S. trade with Japan. The devaluation of Chinese Yuan does not affect its bilateral trade balance with the U.S. and there are mixed evidence in terms of the relationship between the Japanese Yen exchange rate and the U.S.-Japan trade deficit.
|Item Type:||MPRA Paper|
|Original Title:||U.S. Bilateral Trade Deficits with China and Japan: The Role of Japanese Direct Investment|
|English Title:||U.S. Bilateral Trade Deficits with China and Japan: The Role of Japanese Direct Investment|
|Keywords:||Foreign Direct Investment, Bilateral Trade Imbalance, Devaluation of Exchange Rate|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy; International Trade Organizations
F - International Economics > F2 - International Factor Movements and International Business
F - International Economics > F1 - Trade
|Depositing User:||Sokchea Lim|
|Date Deposited:||16. Mar 2012 10:51|
|Last Modified:||20. Feb 2013 22:30|
Adler, J. H. 1945, United States Import Demand during the Interwar Period, The American Economic Review, 35, 418–30.
Adler, J. H. 1946, The Postwar Demand for United States Exports. Review of Economic Statistics, 28, 23–33.
Bahmani-Oskooee, M. and Z. Ardalani, 2006, Exchange Rate Sensitivity of U.S. Trade Flows: Evidence from Industry Data. Southern Economic Journal, 72, 542-559.
Burke, J. 2000, U.S. investment in China worsens trade deficit: U.S. firms build export-oriented production base in China’s low-wage, low labor-protection economy. Economic Policy Institute, Briefing paper.
Bureau of Economic Analysis, U.S. Department of Commerce. Washington, DC: Author. Retrieved February 25, 2009, from http://www.bea.gov/bea/ai1.htm #USDIA.
Cabinet Office, Japan. Statistics. http://www.cao.go.jp/.
Chang, T. C. 1945–46, International Comparison of Demand for Imports. The Review of Economic Studies, 13, 53–67.
Chinn, D. M. 2004, Incomes, Exchange Rates and the U.S. Trade Deficit, Once Again, International Finance, 7, 451-69.
Goldberg, L. and W. E. Dillon, 2007, Why a Depreciation May Not Close the U.S. Trade Deficit, Current Issues in Economics and Finance, Federal Reserve Bank of New York.
Hooper, P., K. Johnson and J. Marguez, 2000, Trade Elasticities for the G-7 Countries, Princeton Studies in International Economics.
Hooper, P. and J. Marguez, 1993, Exchange Rates, Prices, and External Adjustment in the United States and Japan, International Finance Discussion Papers No. 456.
Houthakker, S. H. and P. S. Magee, 1969, Income and Price Elasticities in World Trade, The Review of Economics and Statistics, 51, 111-25.
International Monetary Fund,. International Financial Statistics CD 2009
Klitgaard, T., and K. Schiele, 1997, The growing U.S. trade imbalance with China, Current Issues in Economics and Finance, Federal Reserve Bank of New York.
Xing, Y. 2007, Foreign Direct Investment and China’s Bilateral Intra-Industry Trade with Japan and the U.S., BOFIT Discussion Papers 1/2007.
Xu, Z. 2008, China's exchange rate policy and its trade balance with the U.S., Review of Development Economics,12, 714-727.
United Nations Conference on Trade and Development, UN Comtrade Database. Geneva, Switzerland. http://comtrade.un.org/,
United States Census Bureau. Trade in goods (imports, exports and trade balance) with China. Washington, DC: Author. February 25, 2009, from. http://www.census.gov/foreign-trade/balance/c5700.html#2004.
United States International Trade Commission. ITC. http://www.usitc.gov/.
World Bank. World Development Indicator CD 2008.