Formulating economic and industrial policy requires a deep understanding of the domestic and overseas economies; however, research on the international economy has become even more significant amidst globalization. Globalization has developed and escalated over a long period—the sustained expansion of trade that exceeded economic growth, a greater increase in trade in intermediate goods than in final goods, the enlargement of trade in a broad range of services from information and communication services to technology and travel, and increased overseas production via foreign direct investment—owing to various developments including the proliferation of the Internet, the liberalization of trade that spread also to developing countries, and the networking of free trade agreements that became prevalent primarily in developed countries. Recently, however, the world is experiencing what we might call the Fourth Industrial Revolution or a transformation through Artificial Intelligence and Big Data. We are witnessing anti-immigration/globalization movements in various countries, particularly in the United States and Europe, and state intervention that is inconsistent with a market economy, particularly in China. These developments are raising concerns over the possibility of greater trade restrictions, mainly between the United States and China. Furthermore, there have been various shocks originating outside strictly economic domains, such as extreme weather, massive earthquakes, and pandemics, which have affected the globalization trend and increased uncertainty regarding the global economy. Therefore, even though forecasting is becoming more difficult, it is necessary not only to respond to the most imminent policy concerns, but also to accurately understand the long-term trends and structure of the international economy that is intricately linked through global supply chains, outsourcing, offshoring, and digital data transfers. Thus, we will promote various projects and undertake research—mainly from the perspective of economics, but also from the viewpoint of legal studies—on international trade, foreign direct investment, and other international economic activities in the real economy.
Regarding international trade and foreign direct investment, we will expand our analysis of several themes we have already explored, including the effects of import competition/foreign direct investment on the domestic labor market and the participation of firms in international trade/foreign direct investment. We will also examine new issues such as digital trade, including cross-border data transfers, and global value chains that involve international trade in intermediate goods and an elaborate international division of labor. Furthermore, we will analyze trade policies including economic partnership agreements as well as the influence of various domestic economic policies on international trade and global corporate activities. The results of international economics research conducted during the present century have collectively indicated that firms even within the same industry are enormously heterogeneous. Thus, in addition to analyzing the issues identified above using economic theories, we will analyze them empirically and econometrically using a variety of data, including microdata from government statistics and our own surveys. We will also attempt to utilize the data that have become newly available with the advancement of digitalization.
Japan needs to be actively involved in the formulation of international trade rules as these rules have significant effects on international economic activity. Thus, we will continue to provide recommendations and advice to policy-making bodies based on our accumulated cased studies of World Trade Organization disputes. We will also analyze new important issues in the real economy, such as the international rules on digital trade and the competition neutrality of public support including state-owned enterprises, from a legal perspective to make policy recommendations for the creation of new international rules and systems.
