Japanese shares of export and manufacturing value-added in the global market have declined significantly, whereas those in China have risen sharply. This paper examines how recent increases in offshoring by Japanese firms relates to the changes in the composition of export, the structure of national production, and the international distribution of manufacturing value-added in Japan, China, East Asian countries, the United States, and European countries, on the basis of our original survey of Japanese firm's offshoring and the statistics of export and manufacturing production of these countries. It also discusses how the net cost saving of offshoring due to wage differentials and institutional factors will affect the sustainability of Japanese offshoring.
An earlier version of this paper was presented at the Asian Economic Panel Meeting held at Keio University, Tokyo, 7–8 December 2007. Helpful comments and suggestions made by Wing Thye Woo, Maria Gochoco-Bautista, Örjan Sjöberg, as well as the participants of the meeting, are gratefully acknowledged.