JAPAN INTRAINDUSTRY TRADE DYNAMICS

The U.S.-Japan trade dispute has been ''in the news'' for some time no w. It continues to threaten the stability of the world trading order b ecause the United States alleges that the Japanese market remains ''cl osed'' to its exports. The Clinton administration has made it clear th at it will judge the openness of the Japanese market by ''results.'' I n light of this, this article examines how the pattern of Japan's tota l multilateral trade and trade with the United States has changed betw een 1981 and 1991. We find that between 1986 and 1991 more than half o f the growth in japan's total multilateral trade, and all of the growt h in trade with the United States, was a result of intraindustry trade (IIT) growth. We also find that most of the growth in IIT is a result of import growth in net export industries. This is the type of trade that the United States has been urging Japan to increase, and it is co nsistent with an opening of the Japanese market. J. Japan Int. Econ., June 1997, 11(2), pp. 123-142. Centre of Policy Studies and the IMPACT Project, Monash University, Clayton, Victoria 3168, Australia. (C) 19 97 Academic Press.