When examining this aspect, it is evident that the United States, the euro area, and the United Kingdom may have made notable advancements in product differentiation through technological innovation and new product development. For instance, the Cabinet Office (2011) highlights contrasting trends in terms of trade (the ratio of export prices to import prices) between Japan and Germany, two countries with similar industrial structures. The report suggests that Germany has a higher proportion of intra-industry trade, wherein goods from the same industry are both exported and imported, indicating significant progress in product differentiation. This progress in product differentiation empowers Germany to more effectively pass on the price increases of raw materials, such as natural resources, to the prices of its export goods.
The data do not provide explicit evidence of a direct shift of workers to the tradable industries in pursuit of higher wages. However, considering the persistent stagnation of labor productivity in the nontradable industries and the growing workforce in the industries, driven by factors such as the ongoing shift of the economy toward services, it is plausible to consider that higher wages in the tradable industries might have influenced the rise in wages within the nontradable industries. This relationship implies the possibility of a spillover effect from the wage increase in the tradable industries to wages in the nontradable industries, subsequently leading to an increase in prices in the nontradable industries.
In Japan, prices of nontradables remained unchanged, while in the United States, the euro area, and the United Kingdom, they experienced an upward trajectory. This disparity contributed significantly to the depreciation trend observed in the Japanese real exchange rate. The validity of this interpretation requires further elaboration
Nevertheless, as mentioned above, if the depreciation of Japan's real exchange rate, commonly referred to as "cheap Japan", is indeed a result of the failure of Japan's tradable industries to generate sufficient value added relative to its overseas counterparts, and this deficiency is due to a lack of innovation in new product development and product differentiation, then the "cheap Japan" phenomenon should be viewed as a warning to Japan's tradable industries.
12 Japan is notable among advanced countries for its pronounced tendency to exercise significant restraint in implementing price increases in response to rising production costs, including soaring commodity prices. This cautious approach toward raising prices has resulted in income leakage to foreign markets and is also considered to have played a role contributing to wage reductions (Saito, 2023).
13 The Balassa–Samuelson hypothesis posits that tradables adhere to the law of one price. However, empirical evidence indicates that while the prices of Japan's tradables have been declining, the prices of tradables in Europe and the United States have been rising. This observation presents several potential explanations, including disparities in the competing tradables between Japan and Europe/United States, as well as variations in the level of competition. As noted in footnote 7, companies employ pricing-to-market strategies, which potentially challenges the applicability of the law of one price to tradables. This observation could imply that tradable industries in Europe and the United States have experienced increased markups while Japan witnessed a decrease in markups. Notably, Nakamura and Ohashi (2019) have highlighted that advanced countries tend to exhibit an increasing trend in markups, whereas Japan does not display the same upward trend.
4――まとめ
