Empirical Analyses of Product Architecture Theory and International Trade Theory (2006 revised version)

Author Name OSHIKA Takashi  (Specially Appointed Professor, COE Manufacturing Management Research Center, The University of Tokyo) /FUJIMOTO Takahiro  (Faculty Fellow, RIETI / Professor, Graduate School of Economics, The University of Tokyo)
Creation Date/NO. March 2006 06-J-015
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This paper attempts an empirical analysis of the "architecture theory" proposition developed by Fujimoto Takahiro in his "A Note on Comparative Advantage of Architectures," namely, that the organizational abilities in integration-based manufacturing that Japanese firms built up during the postwar period are highly compatible with integral architecture products and therefore such products account for a substantial portion of Japanese net export goods.

Specifically, in our principal component analysis, based on the responses to a corporate questionnaire (covering 33 companies and 254 products) implemented jointly with the Ministry of Economy, Trade and Industry (METI), the integral strength is prepared as an architecture spectrum indicator (continuous quantity) and shows the relative position of each product in terms of its integral and modular level. We then divide the products surveyed into assembly and process products, and implement regression analysis on the export ratio in the questionnaire responses and the architecture spectrum indicator.

The empirical analysis results are consistent with the above proposition. Also, the regression analysis, in which we add labor intensity as an explanatory variable in addition to the architecture spectrum indicator, suggests that assembly products have statistically significant results. We have found that for these products the export ratio tends to rise and global competitiveness strengthen as the integral and labor intensity level increase. These findings may suggest new developments in international trade theory.