Tetsu Kawakami

Based on countries’ export baskets by destination, this study develops a knowledge similarity index on production and trade structures between countries. Knowledge similarity indices for 2000 and 2019 were calculated using the UN Comtrade database and then visualized as a graphical network with the nodes representing countries connected according to their degree of similarity. The results show substantial similarities in production and trade structures between neighboring countries. Even after controlling for similarities in geology or climate and demand-side preferences, the neighboring similarities remain significant for 2019. This implies that the growth trajectory of countries is strongly affected by the knowledge in their neighborhood.

This paper addresses the issue of what factors can explain the differences in the patterns of regional growth in Mie prefecture, Japan, during the period 1975-2005. The extended shift-share regression model is applied to decompose regional growth into the following four factors: i) the national effect, ii) the industry-mix effect, iii) the regional differential effect, and iv) the regional agglomeration effect. Compared with the standard identity based shift-share method, this model is at an advantage in terms of allowing statistical tests of significance for the decomposed effects. The decomposition uncovers the heterogeneity and similarity of growth patterns at a smaller spatial unit of regional aggregation and gives more informative insights into local industrial policies. The empirical results based on the municipality-level regional data on the number of employees by industry are as follows. First, until the mid-1990s, local policies to attract industries following the global or national trends worked well in the northern and central parts of Mie. A number of manufacturing industries were attracted by better comparative advantages such as the location environment, social capital, and industrial agglomeration. However, the policies did not be effective in the southern part of Mie because of their locations far away from the metropolitan areas and insufficient production circumstances. As a consequence, the interregional disparities in terms of per capita income have widened. Second, in recent years the explanatory power of the industry-mix effect for regional growth is substantial in relation to the other growth effects. This reflects the national trend of job loss in manufacturing and the associated sectors. The urban areas that had enjoyed high growth by expanding the share of manufacturing employment are faced with the difficulties in their growth structure. Third, the regional differential and agglomeration effects tend to spill over into the neighboring municipalities. This evidence implies that self-sustained, endogenous, and continuous local economic development may be achieved more effectively by formulating and implementing local industrial policies on the basis of appropriate spatial units with similar growth patterns.