Spatial econometric techniques can eliminate the bias when spatial effects are neglected. However, so far there is no research on investigating the spatial configuration of Japanese exports and determinants of its exports to sustain its exports competitiveness.
Empirical evidence shows that the spatial configuration of Japan’s exports evolved over the past two decades. It exported to countries with higher political stability, higher degree of economic integration with Japan and to countries which have larger outward foreign direct investment from Japan. Also, its exports have positive and significant relationship with countries which have large imports to Japan. Its exports have the negative relationship with the GDP per capita of its export partner countries. These signify that it increased and expanded exports greatly to East-Asia countries, European Union and North America. These findings have great relevance to policymaking for both corporations and governments where trade or regional economic integration are concerned.