RIETI Policy Symposium
International Economic
Shocks and the Challenges of
International Corporations
Ryuhei Wakasugi
Research Counselor, RIETI
Professor
Kyoto University and Keio University
R. Wakasugi
1
Global Recession after Financial Crisis：
Asymmetric Effects on Economic Growth
z
z
z
Widely spread to the world market
Seriously negative effect on Japan and NIES 4
Positive economic growth in China and India
World
U.S.
EU
United Kingdom
Japan
China
NIES-4
ASEAN-5
India
2005
4.5
2.9
2.2
2.1
1.9
10.4
4.7
5.5
9.2
2006
5.1
2.8
3.4
2.8
2.0
11.6
5.6
5.7
9.8
2007
5.2
2.0
3.1
3.0
2.4
13.0
5.7
6.3
9.3
R. Wakasugi
2008
3.2
1.1
1.1
0.7
-0.6
9.0
1.6
4.9
7.3
2009
-1.3
-2.8
-4.0
-4.1
-6.2
6.5
-5.6
0.0
4.5
2010
1.9
0.0
-0.3
-0.4
0.5
7.5
0.8
2.3
5.6
2011
4.3
3.5
1.7
2.1
2.2
10.2
4.4
4.3
6.9
2
Decrease of world imports：
Sharp decline of US imports
US imports by country
China
$million
500000
Japan
450000
Korea
ＡＳＥＡＮ
Other Asia and Pacific
400000
Europe
350000
Canada
Central and South America
300000
250000
200000
150000
100000
50000
2008:III
2008:IV/p/
2008:I
2008:II
2007:III
2007:IV
2007:II
2007:I
2006:IV
2006:II
2006:III
2006:I
2005:IV
2005:II
2005:III
R. Wakasugi
2005:I
2004:IV
2004:III
2004:I
2004:II
2003:III
2003:IV
2003:I
2003:II
2002:IV
2002:II
2002:III
2002:I
2001:IV
2001:II
2001:III
2001:I
2000:IV
2000:II
0
2000:III
z
Large expansion of US import demand after 2001⇒Large decrease in 2008年
Increase of US import from Japan and East Asia, followed by the increasing
import from China
2000:I
z
3
Decreasing Demand of US after the
Financial Crisis：
Asymmetric Reduction of Imports
z
z
Sharp reduction of US import in Automobiles and parts and
capital goods
Reduction of US imports from Japan and Canada
All countries
Europe
Canada
Mexico
China
Japan
Petroleum and products
Foods, feeds, and beverages
Industrial supplies and materials
Capital goods, except automotive
Automotive vehicles, parts, and engines
Consumer goods (nonfood)
2008:I
2008:II
2008:III 2008:IV 2009:I/p/
0.12
0.15
0.13
-0.09
-0.30
0.13
0.14
0.10
-0.07
-0.27
0.12
0.15
0.16
-0.14
-0.38
0.08
0.10
0.04
-0.11
-0.26
0.02
0.07
0.10
0.01
-0.10
0.03
0.03
-0.07
-0.16
-0.41
0.60
0.08
0.34
0.05
0.00
R. Wakasugi
0.01
0.60
0.12
0.35
0.07
-0.02
0.05
0.59
0.10
0.37
0.03
-0.12
0.05
-0.15
0.06
-0.10
-0.06
-0.24
-0.06
-0.54
-0.05
-0.45
-0.20
-0.49
-0.13
4
Shocks on International Trade
after Financial Crisis
z
Dramatic change in world demand after the bubble before
2007
z
Widely spread to the world market through “global
sourcing”
z
Asymmetric effects on the industries and countries
R. Wakasugi
5
Macroeconomic Imbalance：
Increase of uneven distribution of I-S
imbalance
z
z
US current deficit vs Chinese current surplus
Decreasing trade surplus of Japan
Current Balance
$Billion
1000
800
600
400
200
0
2005
2006
2007
2008
-200
2009
2010
U.S.
EU
Japan
China
NIES-4
ASEAN-5
India
-400
-600
-800
-1000
R. Wakasugi
Year
6
Development of global sourcing
and production
z
Triad trade among US, China (+ East Asia), and
Japan
z
z
z
A decline of Japanese share in US import （－）
A rise of Chinese share in US import （＋）
A rise of Japanese share in Chinese export and import (+)
China
Japan
US
NIES・ASEAN
R. Wakasugi
7
Outsourcing of Japanese
MNCs in the world market
z
Global sourcing and location, in China
U.S.A. & Europe
11.5%
ROW
2.2%
Other Asia
11.6%
China
52.8%
ASEAN
21.9%
R. Wakasugi
8
Amplifiers of the trade shocks
after the financial crisis
z
z
Development of multi-tier production network in East
Asia supplying to US and EU as the final destinations
Selection and concentration to the high-end products
EU
ＪＡＰＡＮ
US
China
NIES 4
ASEAN 5
R. Wakasugi
9
Macroeconomic conditions and
the exports of Japanese firms
z
Selection and concentration to the demand
for high-end products in high-income
countries
z
High dependence of Japanese and East
Asian products on US import demand
z
Changes in trade structure to that with higher
vulnerability to financial shock
R. Wakasugi
10
Changes of macroeconomic condition
and the exports of Japanese firms:
Selection and Concentration
z
The effects of changing macroeconomic conditions on
the export structure after 1990 （ “extensive” and
“intensive” margin）
⎛ TVi ,t ⎞
⎟
ln TVi ,t = ln N i ,t + ln⎜⎜
⎟
N
⎝ i ,t ⎠
N: number of products
TV/N: average price of products
ln TVi ,t = α 0 + α1 ln(GDPJapan ) + α 2 ln(GDPi ) + α 3 ln( Ex ) + α 4WTO dummy + ε
ln N i ,t = β 0 + β1 ln(GDPJapan ) + β 2 ln(GDPi ) + β 3 ln( Ex ) + β 4WTO dummy + ε
⎛ TVi ,t ⎞
⎟ = γ 0 + γ 1 ln(GDPJapan ) + γ 2 ln(GDPi ) + γ 3 ln( Ex ) + γ 4WTO dummy + ε
ln⎜⎜
⎟
N
i
,
t
⎝
⎠
R. Wakasugi
11
11
US economic growth and the changes
of Japanese exports：
reduction of variety・increase of
average price
Export value
Number of
goods
Average price
GDP of US
0.645
-0.069
0.714
GDP of Japan
0.340
0.109
0.230
Exchnage rate (\/$)
0.867
0.199
0.667
Estimated by Wakasugi and Iida (2009)
R. Wakasugi
12
Reduction of number of the
exported goods to US
（Extensive margin）
Extensive margin (US)
8.48
8.46
Actual
Predicted
8.44
8.42
8.4
8.38
8.36
8.34
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
8.32
R. Wakasugi
Estimated by Wakasugi and Iida (2009)
13
13
Increase of the average
price⇒sudden drop
（Intensive margin）
Intensive margin (US)
15.2
Actual
15.1
Predicted
15
14.9
14.8
14.7
14.6
R. Wakasugi
Estimated by Wakasugi and Iida (2009)
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
14.5
14
14
Economic growth of China and
Japanese export
Export value
Number of
goods
Average price
GDP of China
0.848
0.092
0.755
GDP of Japan
0.017
0.361
-0.344
-0.634
0.245
-0.879
0.403
0.006
0.396
Exchnage rate (\/$)
Dummy for WTO
Estimated by Wakasugi and Iida (2009)
R. Wakasugi
15
15
Increasing number of exported
goods to China: (extensive margin)
Extensive margin (China)
8.7
Actual
Predicted
8.6
8.5
8.4
8.3
R. Wakasugi
Estimated by Wakasugi and Iida (2009)
20
08
20
06
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
8.2
16
16
Increasing average price
(Intensive margin)
Intensive margin (China)
15
Actual
14.5
Predicted
14
13.5
13
12.5
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
19
90
12
Estimated by Wakasugi and Iida (2009)
R. Wakasugi
17
17
Changes of Japanese export
structure
z
z
z
z
z
Selection and concentration
Concentration to the high-end products for
US market
Response to the high-income consumers
Global sourcing and location
Expansion of exports in intermediate and
capital goods, and eventually the
development of product range
R. Wakasugi
18
New Paradigm after the financial
crisis
z
Changes of demand structure in the world market
z
Changes to higher globalization of production mode
z
Higher qualification of market system in the world
z
Response of corporate strategy
R. Wakasugi
19
Structural change of world
demand
z
From one black hole of high-income region to
multiple absorbers in high- and middleincome regions
R. Wakasugi
20
Growing market size in high income countries
Growing population in meddle income
countries
Per capita GDP
0≦1,000
1,000≦2,000
2,000≦5,000
5,000≦10,000
10,000≦20,000
20,000≦30,000
30,000≦
GDP
1996
2006
0.06
0.03
0.02
0.02
0.06
0.08
0.05
0.11
0.06
0.04
0.56
0.04
0.19
0.68
R. Wakasugi
Population
1996
2006
0.58
0.37
0.10
0.08
0.11
0.28
0.05
0.12
0.02
0.02
0.11
0.01
0.03
0.13
21
1996
Per capita GDP
0≦1,000
1,000≦2,000
2,000≦5,000
5,000≦10,000
10,000≦20,000
20,000≦30,000
30,000≦
Shere
GDP Population
1996
1996
0.06
0.58
0.02
0.10
0.06
0.11
0.05
0.05
0.06
0.02
0.56
0.11
0.19
0.03
Per capta GDP and Distribution of Population nad Income (1996)
1.0
0.9
CDF (GDP, 1996)
0.8
CDF (Population, 1996)
0.7
0.6
0.5
0.4
0.3
0.2
1人当たりGDP
77
30
14
51
2
18
21
7
25
21
3
30
83
2
52
58
38
36
22
71
17
95
R. Wakasugi
13
61
10
95
78
7
63
0
48
9
36
9
30
0
21
8
70
0.0
29
94
0.1
22
2006
Per capita GDP
0≦1,000
1,000≦2,000
2,000≦5,000
5,000≦10,000
10,000≦20,000
20,000≦30,000
30,000≦
GDP Population
2006
2006
0.03
0.37
0.02
0.08
0.08
0.28
0.11
0.12
0.04
0.02
0.04
0.01
0.68
0.13
Per capta GDP and Distribution of Population nad Income (2006)
CDF
1.0
0.9
CDF (GDP, 2006)
0.8
CDF (Population, 2006)
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
111
287
361
561
788
939
R. Wakasugi
1449 2122 2664 3136 3792 5285 6688 9009 14442 27731 38019 52153
1人当たりGDP
23
Market expansion in high
income countries
Per capita GDP and Distribution od Income
CDF (Income)
1.0
0.9
1996
0.8
2006
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
100
1000
R. Wakasugi
1人当たりGDP
10000
100000
24
Multiple markets
「$2,000≦$5,000」「$30,000 ≦」
Per capita GDP and Distribution of Population
CDF (Population)
1.0
0.9
0.8
0.7
0.6
0.5
1996
0.4
2006
0.3
0.2
0.1
0.0
100
1000
10000
100000
1人当たりGDP
R. Wakasugi
25
Equalization of income in
middle income countries
Distribution of Population and Income
GDP share
1.0
0.8
0.6
0.4
2006
0.2
1996
0.0
0.0
0.2
0.4
0.6
0.8
1.0
Population share
R. Wakasugi
26
Diversification of market size:
High income market⇒High income and
middle income markets
Share
Per capita GDP and Distribution of Population and Income
0.80
GDP, 1996
GDP, 2006
Pop. 1996
Pop. 2006
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0≦1,000
1,000≦2,000
2,000≦5,000
5,000≦10,000 10,000≦20,000 20,000≦30,000
30,000≦
Per capita GDP
R. Wakasugi
27
Growth model responding to the
changing demand in the world
z
Changes of demand structure in the world market
z
z
z
Recovery of IS balance in US and the stagnant demand in
high income countries
Diversification of growing demand: Expansionary demand in
the middle income countries including Asia (China, India)
and BRICs
Growth model with East Asia as a core of production
and consumption
z
“Two polar model with production network in East Asia and
high demand in developed countries” to “Multiple polar
model with production and demand in East Asia”
R. Wakasugi
28
Qualified market:
responding to the changing world
market
z
Realization of higher market quality in the
world market
z
z
z
z
Liberalization of trade and investment:
acceleration of WTO new round
Market rules to realize the consumer’s benefit
Enforcement of contractibility in the market
transaction: establishment of domestic judicial
system
Prevention against the rising protectionism in
the world market:
R. Wakasugi
29
MNCs’ strategy to the
changing world market
z
Multiple production system responding to a variety
type of demand with dispersive income
z
Supply system for a variety of goods and service
responding to high and middle income consumers
z
Innovation and creation of new goods and services,
responding to the fast catch-up
z
Product strategy and corporate organization
responding to the global market
z
Lower competitiveness of language (Japanese) intensive
goods and services
R. Wakasugi
30