nep-sea New Economics Papers
on South East Asia
Issue of 2005‒03‒06
six papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Increasing Complexity and Limits of Organization in the Microlithography Industry: Implications for Japanese Science-based Industries By Hiroyuki Chuma
  2. The Internationalization and Performance of Korean and Japanese Firms: An Empirical Analysis Based on Micro-data By Sanghoon Ahn; Kyoji Fukao; Hyeog Ug Kwon
  3. Monetary and Fiscal Policy in a Liquidity Trap: The Japanese Experience 1999-2004 By Mitsuru Iwamura; Takeshi Kudo; Tsutomu Watanabe
  4. Can We Trust Private Firms as Suppliers of Vaccine for the Avian Influenza? By Forslid, Rikard
  5. "Risk, Transaction Costs, and Geographic Distribution of Share Tenancy: A Case of Pre-War Japan" By Yutaka Arimoto; Tetsuji Okazaki; Masaki Nakabayashi
  6. "The New Development of Dispersed Production System: A Case from the Japanese Toy Industry in the Inter-war Period" (in Japanese) By Masayuki Tanimoto

  1. By: Hiroyuki Chuma
    Abstract: The purpose of this paper is to identify characteristics of the complexities and organizational limits that science-based industries in Japan are facing, to clarify the causes and effects of those characteristics and to show how they are related to the recent decline in global competitiveness in these industries. The microlithography industry is used for this purpose as a typical example of science-based industries. In this industry, Nikon and Canon were quite dominant until around the mid 1990s, while ASML of the Netherlands began to increase its competitive strength rapidly in the mid 1990s. The paper introduces the new concept of "interim modularity" vis-a-vis "ex ante modularity" a la Baldwin and Clark (2000) to explain how ASML tries to cope effectively with the drastically increasing complexity of such a technology. The concept of interim modularity is defined as the communication benefits induced by the modular architecture during trial-and-error development processes, no matter how incomplete such architecture may be. The paper emphasizes that extremely complex tools like microlithography require interim modularity to effectively orchestrate the dispersion of specialized knowledge and know-how over a wide range of professionals inside and outside of corporations and that interim modularity is more effectively pursued by ASML than by Nikon or Canon. The paper also indicates that the insufficient cognition of the importance of interim modularity has been widely weakening the competitiveness especially in Japanese science-based industries.
    Date: 2005–03
  2. By: Sanghoon Ahn; Kyoji Fukao; Hyeog Ug Kwon
    Abstract: Both Korea and Japan are leading exporting countries of advanced manufactured products, and the competitive and efficient manufacturing activities are important pillars of the affluence of the two economies. Yet, comparing the manufacturing sectors of the two countries in the 1990s brings to light a startling contrast in their performance. Applying the same empirical method to the analysis of micro-data for Japanese manufacturing firms for 1994-2001 and Korean manufacturing plants for 1990-98, this paper examines differentials in Japanese and Korean productivity growth. This paper focuses on the role of competition in firm dynamics and on the importance of internationalization as a major determinant of firm performance.
    Date: 2005–03
  3. By: Mitsuru Iwamura; Takeshi Kudo; Tsutomu Watanabe
    Abstract: We characterize monetary and fiscal policy rules to implement optimal responses to a substantial decline in the natural rate of interest, and compare them with policy decisions made by the Japanese central bank and government in 1999-2004. First, we find that the Bank of Japan's policy commitment to continuing monetary easing until some prespecified conditions are satisfied lacks history dependence, a key feature of the optimal monetary policy rule. Second, the term structure of the interest rate gap (the spread between the actual real interest rate and its natural rate counterpart) was not downward sloping, indicating that the Bank of Japan's commitment failed to have suffcient influence on the market's expectations about the future course of monetary policy. Third, we find that the primary surplus in 1999-2002 was higher than predicted by the historical regularity, implying that the Japanese government deviated from the Ricardian rule toward fiscal tightening. These findings suggest that inappropriate conduct of monetary and fiscal policy during this period delayed the timing to escape from the liquidity trap.
    Date: 2005–03
  4. By: Forslid, Rikard (Dept. of Economics, Stockholm University)
    Abstract: Using a simple monopoly model, this note analyses the incentives of a vaccine producer. Because a vaccine tends to eradicate the disease for wich it is intended, it also tends to destroy its own market. This means that monopolistic producers may be tempted, in a socially non-optimal way, to delay the introduction of vaccines against new infections until the disease has spread.
    Keywords: Vaccines
    JEL: D42 D62 H10 I18 L10
    Date: 2005–02–22
  5. By: Yutaka Arimoto (Graduate School of Agricultural and Life Sciences, University of Tokyo); Tetsuji Okazaki (Faculty of Economics, University of Tokyo); Masaki Nakabayashi (Graduate School of Economics, Osaka University)
    Abstract: This paper investigates determinants of geographic distribution of share tenancy and analyzes its efficiency implications in pre-war Iwate prefecture, Japan. The distribution of share tenancy was attributable to risk represented by yield variability, which in turn was affected by seasonal winds called Yamase and topographic features. That risk raised transaction costs of adopting a fixed-rent tenancy associated with the common custom of rent reduction in Japan that mitigated the problem of risksharing. Estimation results suggest that risk, wealth, and strength of community ties were the main determinants of contract choice.
    Date: 2005–03
  6. By: Masayuki Tanimoto (Faculty of Economics, University of Tokyo)
    Abstract: This paper explores Japan's pre-war industrialization from the viewpoint of small- scale businesses. A typical case can be seen in the development of rural weaving industry before the World War I. There functioned the production form besides factory such as putting-out system based on the peasant's sideline work. After the World War I, however, putting-out system in the weaving industry rapidly gave way to factory system that equipped the power looms. Contrastively, the industrial development in large cities, especially in Tokyo during the Inter-war period, entailed the increase of newly formed petty and small workshops. There functioned the production system based on the complex transaction of merchants, factories, small workshops and domestic works. Toy manufacturing, which developed as an export industry in the Inter-war Tokyo, was one of the typical industries based on that production system. As the urban area lacked the peasants and the intimate communities, urban small businesses stood on the different foundations. The skill was trained in the quasi-apprentice system where juvenile workers experienced a sort of on the job training. Based on this skill formation, not a few employees set up their own businesses and competed even with the wholesalers. Their activities were supported by the positive externality of the cluster. The formal and informal institutions played significant roles to prevent the transactions from disorder. The role of production organizer that combined the function of the merchant was also important. The combination of the merchant and the household economy, together with the social and institutional basis, promoted an industrialization based on the small businesses.
    Date: 2005–02

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