Non-tariff Measures and Margins of Trade: Evidence from Japanese Manufacturing Firms

         
Author Name OBASHI Ayako (Aoyama Gakuin University)
Creation Date/NO. August 2019 19-J-044
Research Project Microeconometric Analysis of Firm and Industry Growth
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Abstract

This paper connects a newly created dataset of non-tariff measures by UNCTAD with Japanese manufacturing firm-level data, to see whether and how non-tariff-measures affect the firms' export performance. Specifically, we construct an indicator which is a measure of the degree of cost burden each firm faces in order to additionally comply with technical regulations implemented in the export destination country in addition to Japanese domestic regulations, focusing on the possibility that cross-country regulatory differences may diminish trade. Using the constructed indicator, we analyze the impact of additional regulatory compliance requirements on firms' export decisions and volumes. Our empirical findings show, among other things, that the additional regulatory compliance requirements adversely affect the export decisions of small and medium-sized, low-productivity Japanese manufacturing firms. In order to expand export activities in a significant manner, supportive policies are necessary to enable SMEs to adapt to the additional demands imposed by such technical regulations.