The Impact of Outsourcing on the Japanese Economy
This book examines the patterns, determinants and labour market implications of international fragmentation of production – the crossborder splitting of the production process within vertically integrated manufacturing industries – focusing on the experience of Japanese manufacturing. Despite the rapidly growing importance of production fragmentation in Japanese manufacturing, there is little systematic empirical analyses of this phenomenon and its implications for labour market performance and adjustments. The few available studies have focused narrowly on the emerging patterns and intensity of fragmentation-based trade. In the absence of such systematic analyses of the Japanese case, debates on the implications of production fragmentation for manufacturing performance and labour market adjustments rely largely on studies of the US manufacturing experience, though it is well known that there are important differences between Japanese and US manufacturing industries. As in other developed economies, there is a widespread perception in Japan that production fragmentation leads to losses in Japanese manufacturing employment. This book aims to explore the Japanese case in depth, compare it with the US experience and to draw out the main trade and labour market implications of production fragmentation from this comparative perspective. The book begins with a comprehensive interpretative survey of the theory of production fragmentation in order to place the empirical analysis in context. The empirical analysis, which forms the core of the book, has three main components. First, it examines patterns and determinants of cross-border trade in parts and components (‘fragmentation trade’) by using trade data compiled on the basis of a new commodity list...