Exchange Rate Movements, Exporting by Japanese firms, and the Role of R&D and Global Outsourcing

We investigate the effect of the exchange rate on Japanese firms’ performance in the international markets, using a comprehensive Japanese firm-level dataset. We examine the effect of firm characteristics on firm export dynamics at the firm–region export level. The estimation results overall indicate that a depreciation in the exchange rate may play an important role in export expansion or entry, but a limited role in additional entry to a new regional market. The results also indicate that Japanese firms strategically utilise imports to alleviate negative shocks from the exchange rate on exports for price competitiveness.  

ERIA-DP-2018-19