Che, Yi and Du, Julan and Lu, Yi and Tao, Zhigang (2011): Once an enemy, forever an enemy? the long-run impact of the Japanese invasion of China from 1937 to 1945 on trade and investment.
Download (427Kb) | Preview
We are living in an increasingly globalized world yet with constant and endless conflicts among countries. While studies have uncovered the impacts of various economic factors and policy regimes on trade and investment, a much less understood issue is whether conflicts among countries have any, especially long-lasting, impacts on cross-border trade and investment. In this paper, we exploit one of the most important conflicts of the 20th century between what are currently the world's second and third largest economies, the Japanese invasion of China from 1937 to 1945, to investigate its long-run impact on contemporary trade and investment between the two countries. We find that Chinese regions that suffered more severe damage in the Japanese invasion are both less likely to trade with and trade less with Japan. Consistently, we also find that Japanese multinationals are less likely to invest in Chinese regions that suffered greater numbers of casualties during the Japanese invasion. Our study shows that historical animosity still matters for international trade and investment, despite the trend toward a flat world.
|Item Type:||MPRA Paper|
|Original Title:||Once an enemy, forever an enemy? the long-run impact of the Japanese invasion of China from 1937 to 1945 on trade and investment|
|Keywords:||Sino-Japanese War; Trade; Foreign Direct Investment|
|Subjects:||D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict; Conflict Resolution; Alliances
F - International Economics > F1 - Trade > F10 - General
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
|Depositing User:||Yi Lu|
|Date Deposited:||14. May 2012 16:23|
|Last Modified:||12. Feb 2013 02:37|
Blomberg, Brock S. and Gregory D. Hess. 2006. "How Much Does Violence Tax Trade?", Review of Economics and Statistics 88, 599-612
Davis, Donald R. and David E. Weinstein. 2002. "Bones, Bombs, and Break Points: the Geography of Economic Activity", American Economic Review, 92. 1269-1289
Gallant, A.R. and D. Nychka. 1987. "Semi-nonparametric Maximum Likelihood Estimation", Econometrica, 15, 363-390
Glick, Reuven and Alan M. Taylor. 2010. "Collateral Damage: Trade Disruption and the Economic Impact of War", Review of Economics and Statistics 92, 102-127
Guimaraes, Paulo, Octavio Figueiredo, and Douglas Woodward. 2004. "Industrial Location Modeling: Extending the Random Utility Framework", Journal of Regional Science, 44(1), 1-20.
Helpman, Elhanan, Marc Melitz, and Yona Rubinstein. 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes", Quarterly Journal of Economics, 123, 441-487
Head, Keith, Thierry Mayer, and John Ries. 2010. "The Erosion of Colonial Trade Linkages after Independence", Journal of International Economics, 81, 1-14
Head, Keith, John Ries, and Deborah Swenson. 1995. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investments in the United States", Journal of International Economics, 38, 223-247
Martin, Philippe, Thierry Mayer, and Mathias Thoenig. 2008. "Make Trade Not War?", Review of Economic Studies 75, 865-900
Miguel, Edward and Gerard Roland. 2011. "The Long-run Impact of Bombing Vietnam", Journal of Development Economics, 96, 1-15
McFadden, Daniel. 1974. "Conditional Logit Analysis of Qualitative Choice Behavior", in P. Zarembka (ed), Frontiers in Econometrics, Academic Press: New York, 105-142
Przeworski, Adam, Michael E. Alvarez, Jos'e Antonio Cheibub, and Fernando Limongi. 2000. Democracy and Development: Political Institutions and Well-being in the World, 1950-1990, New York: Cambridge University Press.