Working Paper: NBER ID: w23481
Authors: Christopher M. Meissner; John P. Tang
Abstract: Japanese exports between 1880 and 1910 increased massively in volume, changed composition, and shifted away from leading industrialized countries toward poorer Asian neighbors. The product mix also varied with the level of development of the destination, with new products and specializations more likely to ship to less developed regional economies. Using a new disaggregated data set of the bilateral-product level exports for the universe of Japanese trade partners, we find that changes in various extensive margins (new markets, new goods) account for over 30 percent of export growth over this period. Determinants of initial entry include trade costs and market size. Products started in a small number of markets and accumulated additional destinations building on earlier successes. Subsequent entry was also influenced by product-level characteristics interacting with destination-specific characteristics. We confirm that export growth for “new” products was stronger in LDCs than in advanced economies, but the latter still claimed a larger share of overall trade growth. There is little evidence that Japan exported low quality manufactured goods to new, low-income destinations. Instead, reductions in trade costs helped Japan augment market share. Exit is relatively rare but appears to be determined by market-specific demand-side effects and product-specific factors.
Keywords: Japanese exports; industrialization; trade costs; economic history
JEL Codes: F14; F15; N75
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| changes in extensive margins (F12) | export growth (F43) |
| new products (O36) | stronger growth in LDCs (O54) |
| comparative advantage + trade costs + destination demand conditions + product-specific factors (F12) | export patterns (F10) |
| trade costs (F19) | export patterns (F10) |
| declining trade costs (F12) | Japan's entry into new markets (F69) |
| market size (L25) | likelihood of product entry (L15) |