Japan went wrong long ago!

Doug Henwood dhenwood at panix.com
Sun Apr 23 11:34:36 PDT 2000

[In 1964, according to the Penn World Tables, Japan had a per capita GDP 401% of the U.S.'s; South Korea, 9%. In 1992, Japan's had reached 86% of U.S. levels, South Korea, 42%. For Mexico, the figures were 29% and 34%. Yet as these distinguished professors will tell you Japan & SK made terrible mistakes.]

"Trade and Growth: Import-Led or Export-Led? Evidence From Japan

and Korea"


Harvard University

John F. Kennedy School of Government

National Bureau of Economic Research (NBER)


Columbia University

Department of Economics

National Bureau of Economic Research (NBER)

Document: Available from the SSRN Electronic Paper Collection:


Paper ID: NBER Working Paper No. W7264

Date: July 1999


Email: Mailto:robert_lawrence at harvard.edu

Postal: Harvard University

John F. Kennedy School of Government

79 John F. Kennedy Street

Cambridge, MA 02138 USA

Phone: 617-495-1118

Fax: 617-496-0063


Email: Mailto:dew35 at columbia.edu

Postal: Columbia University

Department of Economics

MC 3308

420 W. 118th Street

New York, NY 10027 USA

Paper Requests:

Full-Text downloads are available from SSRN Online for $5.


It is commonly argued that Japanese trade protection has enabled

the nurturing and development internationally competitive firms.

The results in our paper suggest that when it comes to TFP

growth, this view of Japan is seriously erroneous. We find that

lower tariffs and higher import volumes would have been

particularly beneficial for Japan during the period 1964 to

1973. Our results also lead us to question whether Japanese

exports were a particularly important source of productivity

growth. Our findings on Japan suggest that the salutary impact

of imports stems more from their contribution to competition

than to intermediate inputs. Furthermore our results indicate a

reason for why imports are important. Greater imports of

competing products spur innovation. Our results suggest that

competitive pressures and potentially learning from foreign

rivals are important conduits for growth. These channels are

even more important as industries converge with the market

leader. This suggests that further liberalization by Japan and

other East Asian countries may result in future dynamic gains.

Our results thus call the views of both the World Bank and the

revisionists into question and provide support for those who

advocate more liberal trade policies.

JEL Classification: F14, F40

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