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During the 1980s and 1990s, Japanese manufacturers began to relocate production from sites in Japan to low-wage East Asian countries such as China, Malaysia and Thailand. Imports of manufacturing goods increased substantially over the same period. This rapid rise in imports, and proliferation of globalization, has led to concerns among policymakers that firms and plants may close. The media portray foreign multinationals as closing down productive Japanese plants and relocating them elsewhere in Asia. The authors find that this is not the case. Equally, the plants that are closed are below average productivity and the exit component contributes a very small fraction to productivity growth (using both the GR and FHK methods).
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