Trade bloc formation in inter-war Japan.

The purpose of this paper is to discuss the trading system in the inter-war period concerning the Japanese Empire by means of border effect analysis in the gravity model. The results show sizeable and steadily increasing trading bloc border effects from the 1910s through the 1930s. This sizeable border effect might have resulted from many possible factors: trade diversion and creation due to increased protectionism and industrialisation in Korea and Formosa, certain political factors, and Japanese migration to Korea and Formosa, which contributed to a 52% increase of bloc border effects in mainland Japan. J. Japanese Int. Economies 21 (2) (2007) 214-236.