Impact of Growing Imports: A comparison of international and domestic firms in the Japanese manufacturing industry

Emerging economies, with steady and high growth, have been increasing their share of the world trade, as well as strengthening their export competitiveness in industries where developed countries have captured the world market.

Based on recent trade theory and empirics, the commencement of exporting is a possible countermeasure against increasing import volume from emerging economies, aside from the downsizing of production or market exits. However, this is not applicable if the influence of imports is broadly spread across firms in the same industry.

Thus, this paper confirms the impact of imports on Japanese manufacturing firms classified by their internationalization status. In concrete terms, we classify the data from the "Basic Survey of Japanese Business Structure and Activities," implemented by the Ministry of Economy, Trade and Industry, into firms that are in charge of internationalization (exporting, importing, and having foreign affiliates) and others, and examine the significance of imports from three areas (Asian countries, other developing countries, and developed countries) on the variability in the number of employees, real turnover, etc.

The result shows that the impact of imports from all three areas on firms in charge of internationalization is weaker than the other firms in terms of employees, implying the potential of internationalization to weaken the influence of imports.