|Author Name||KONISHI Yoko (Senior Fellow, RIETI)|
|Creation Date/NO.||March 2017 17-P-011|
|Research Project||Decomposition of Economic Fluctuations for Supply and Demand Shocks: Service industries|
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Japanese manufacturers are becoming increasingly dependent on non-manufacturing functions such as sales, leasing, and after-sales services as their main source of value added in global value chains (GVCs). We discuss the role of services in GVCs in observing the service industry's contributions to exports and growth of the Japanese economy. The service industry affects trade and the global economy in two ways. One is by exports of services directly to partner countries. Another is through observation of the services embodied in the manufacturing process for parts, intermediate products, or final products, which is known as indirect trade. In this paper, we focus on tourism because of Japan's favorable tourism market, which has grown rapidly in recent years. Also, tourism has a unique feature known as high tradability service and affects various industries (e.g., transport, retail, wholesale, restaurant, agricultural production, cleaning, information communication, etc.). In order to understand Japan's tourism GVCs, we propose the GVC map following Gerreffi et al. (2011) and estimate the ripple effects of the inbound boom to the Japanese economy using the input-output (I-O) table conducted by the Ministry of Economy, Trade and Industry (METI).