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GTAP Resource #3285

"Economic Impact of Japan's Food and Agricultural FDI on Worldwide Recipient Countries"
by Rossi, Paula and Masaru Kagatsume

The consumption of food and agricultural (F&A) products in Japan is flattening out. As a result, the sector has been shrinking reheating the talks in Japan about the need to establish policies aimed at revitalizing and enlarging the scope of the Japanese agri-business. One possible strategic response is overseas expansion which also bears the potential to improve food availability for Japanese consumers. However, concerns have been raised over whether outward FDI in F&A may in fact aggravate the country's food security problem by having a "boomerang effect" on the farming sector caused by FDI-induced F&A exports to Japan, an issue closely related to Japan's import protection policies. This paper discusses the impacts of Japan's outward FDI in the F&A sectors and Japan's F&A import protection policies. Two complementary methodologies are adopted. First, a panel data specification is used to assess the F&A productivity response to Japanese FDI in the recipient economies. Following, the GTAP model is employed to analyze the worldwide impacts of Japanese outward FDI in F&A and the effects of unilateral changes in Japan's agricultural import protection policies. The major policy implications derived from this study are: increases in Japanese FDI can contribute to enhance F&A production in some of the regions considered, although the impact is small; Japan's FDI is welfare-improving in both supplier and those recipient regions able to rip the benefits of the technological spillovers; concerns that outward FDI could have a boomerang effect in Japan seem to be justified although this conclusion is largely influenced by the year of the database used; an import tariff increase makes Japanese consumers worse-off, producers better-off and improves the country's self-sufficiency rate; and import tariff reduction has positive impact for Japanese consumers, hurts producers and Japan experiences a deterioration of its self-sufficiency rate.

Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2010
Created: Kagatsume, M. (4/14/2010)
Updated: Rossi, P. (6/1/2010)
Visits: 2,795
- Agricultural policies
- Foreign direct investment
- Asia (East)
- Asia (Southeast)
- Asia (South-Central)
- Oceania
- Middle East
- European Union
- North America
- South America

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