THE GROWING IMPORT AND DOMESTIC PRODUCTION OF OLIVE OIL IN JAPAN: THE APPLICATION OF THE GRAVITY MODEL

• Published in: Current politics and economics of Northern and Western Asia Vol. 26; no. 1; pp. 73 - 95
• Main Author: Kashiwagi, Kenichi
• Format: Journal Article
• Language: English
• Published: Hauppauge Nova Science Publishers, Inc 01.01.2017
• Subjects: Agricultural economics; Commodities; Consumers; Density; Differentiation; Econometrics; Economic models; Emerging markets; Endowment; Exports; GDP; Gravity; Gross Domestic Product; Imports; International trade; Market shares; Markets; Monopolistic competition; Olive oil; Panel data; Product differentiation; Resistance; Greece; Turkey; United States > US; Asia; Japan; Europe; Brazil; Australia; Mediterranean Area
• ISSN: 2158-5865

As the size of the global olive oil market has been rapidly growing, new markets emerged outside Europe, particularly in the Asia-pacific region. Japan, as an export destination, is an emerging market for olive oil in East Asia. This chapter investigates the determinant factors that affect Japan's olive oil imports. Based on unbalanced panel data of Japan's olive oil imports from 15 trade partners from 1988 to 2013, the commodity-specific gravity model is estimated. The results suggest that an increase in the GDP of Japan and its trade partners has a positive effect and the distance between them is a resistance factor. The difference in factor endowments has a negative impact on olive oil imports, whereas increasing domestic production has a positive effect on the flow of imports. Together with the fact that Japan increased its olive oil exports, these results indicate the development of an intra-industry olive oil trade and support the concept of a new trade theory rather than the traditional Heckscher-Ohlin discussion. These findings imply that promotion of the export of varieties of olive oil through product differentiation would be more relevant to explore Japan's emerging market, rather than producing a large quantity sold at a lower price.