Local Product Relatedness and Export Behavior at the Firm Level in Japan

Author Name HAYAKAWA Kazunobu (Institute for Developing Economies, Japan External Trade Organization) / MATSUURA Toshiyuki (Keio University)
Creation Date/NO. September 2020 20-J-036
Research Project Stable Development of Regional Economies under a Declining Population
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This study examines the relationship between local product relatedness and the extensive margin and intensive margin of export, namely the decision to start exporting and amount exported at plant-level, by using the panel dataset of Japanese Census of Manufacture in 2001, 2007, and 2014. First, we calculate the density of bilateral product relatedness and then construct the region-product-level measure for the links between the product relatedness and the local pattern of specialization. We show that local product relatedness has a positive impact on the extensive margin, but not the intensive margin of export at plant-level. This result suggests that firms located in regions with higher local product relatedness are more likely to start exporting.