Why Are Exports to East Asia Growing So Rapidly? -A Structural VAR Approach in Search of Non-China Factors-

July 2004
Hitoshi Sasaki
Bank of Japan

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Abstract

The driving force of Japan's economic recovery is exports; in particular, exports to East Asia have been increasing rapidly. Two main reasons can be pointed out for the strength of exports to East Asia. The first reason is the expansion of China's domestic demand. The second reason is a characteristic of the international division of labor: a world economic recovery led mainly by IT-related demand is likely to induce an increase in Japan's exports, particularly those to East Asia. This paper aims to investigate this second reason further, by estimating a structural VAR model.