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Variety in Japan (1980-2000)

Since the Meiji period, the composition of Japanʼs foreign trade has had many changes. Along with the.development of the economy, more and more products are available for export and, at the same time, more varieties of goods are imported for domestic consumption and production. | Variety in Japan (1980― 2000) Nguyen Anh Thu 1．Introduction 　　Since the Meiji period, the composition of Japanʼs foreign trade has had many changes. Along with the development of the economy, more and more products are available for export and, at the same time, more varieties of goods are imported for domestic consumption and production. However, since the mid-1980s, specialization and the expansion of foreign direct investment became trends in the Japanese economy, which might reduce the range of exported products. The 1980s also witnessed solid developments of Japanʼs economy, which might have the opposite effect on variety. From 1993, Japanʼs economy entered a period of economic stagnation. We expect that varieties of imports and exports might decrease in this period. Also the conclusion of many bilateral trade agreements in these periods might affect Japanʼs trade composition as well as import and export varieties. Therefore, it is interesting to access the real changes of variety in Japan during these two periods: the 1980s with an economic boom and the 1990s with an economic slowdown. In this paper we present calculations of variety of Japanʼs import and export for 21 industries over 21 years with a method developed by Feenstra (1994). 　　Many papers on economic growth theory have confirmed the importance of product variety (Romer, 1990; and Grossman and Helpman, 1991) and a number of empirical studies have tested this theory. These studies analyze the relationship between an increase in variety and total factor productivity (TFP) as in Feenstra et al. (1999a), between an increase in variety and Gross Domestic Product (GDP) in Funke and Ruhwedel (2005), between variety and business groups in Feenstra et al. (1999b) or between an increase in variety and welfare gains as in Broda and Weinstein (2006). A careful study of Japanʼs product variety, therefore, will be significant for other empirical studies of economic growth theory. 　　Firstly, we have to consider .