COVER STORY • 5Interview with Dr. Ryo Makioka, Lecturer at the Graduate School of Economics and Business atHokkaido University

E

PBM Applied to Export
Promotion Policy

By Japan SPOTLIGHT
A young scholar talks about his Evidence-Based Policy Making (EBPM) experience in Export Promotion
Policy.
(Interviewed on Feb. 18, 2022)

Introduction
JS: Could you please tell us how

you got involved in working on
EBPM?

nothing, as pointed out by Professor
Yasuyuki Todo at Waseda University (https://www.waseda.jp/top/en/news/34931).
JS: Could you elaborate on youreconometric analysis on cause andeffect relations between policy andthe economy?

Makioka: I have been working on quantitative
analysis by using microdata on individuals orbusiness firms with a focus on international
Makioka: In EBPM, it is necessary to make a
trade and foreign direct investment indistinction between correlation between theinternational economics. To be more specific,
two variables and their cause and effectI have done work on the effects of export
relations. It is true that there is correlation
promotion policy and the impact of abetween productivity and exports, but it does
business firm’s transfers to a developing
not necessarily mean there is a cause andcountry upon the host country’s labor force. Ieffect relation between the two. What ishave done also empirical research using
important in EBPM is to find what data
government statistics on the impact of theDr. Ryo Makioka
sources are available to clarify cause andcurrent Covid-19 pandemic on the Japanese
effect relations. Regression analysis may show correlation, but notlabor market. I got directly involved in the Ministry of Economy,cause and effect.
Trade and Industry’s (METI) research project on EBPM in myI used a matching method named “propensity score matching” forprevious job at the Research Institute of Economy, Trade andmy analysis of the effect on export promotion policy (https://Industry (RIETI) on export promotion policy.
onlinelibrary.wiley.com/doi/10.1111/roie.12548). In this analysis, I
tried to find the difference in export performance between firms
Method Adopted in EBPM on Export
supported by an export promotion policy and those without one. IPromotion Policy
selected firms with similar characteristics in terms of the number of
JS: In your EBPM analysis on the impact of export
employees, sales or percentage of workers by department, etc.
promotion, you assume that firms with higher
Among these firms, there are some supported by an export
productivity would export more. Is this assumption
promotion policy and some not supported by one. Then, comparison
valid for all business firms?
of those two firms’ export performances should lead to clarificationof an export promotion policy’s impact on their export performance.
Makioka: Yes, its validity has been proved in general by many
This is of course not a perfect method, extracting the policy impact
countries’ data, including Japan. For example, a RIETI discussion
only, as a factor such as a firm’s intention to globalize its businesspaper shows the pattern using Japanese data (Ryuhei Wakasugi etthat cannot be observed by data is only partially reflected. But
al, 2008, https://www.rieti.go.jp/jp/publications/dp/08e036.pdf). It is
comparison of companies with similar business characteristics istrue that there are exceptions with high productivity firms exporting
certainly useful in discovering cause and effect relations.
20 Japan SPOTLIGHT • May / June 2022

https://www.jef.or.jp/journal/

Role of Information in Determining Export
Performance
JS: According to your EBPM analysis, barriers toinformation about exports can make a difference inexport performance, How much do they affect acompany’s performance?

Makioka: In my analysis, I only detected that barriers to information
would be an impediment to exports from the relationship between
export performance and an export promotion policy, and that an
export promotion policy would work well in mitigating those barriers.
Barriers to information are not tangible through data alone and there
is a limited number of previous analyses on them. So I cannot tell
you how much they would affect export performance. Intuitively, I
think barriers to information could more seriously affect the export
performance of small and medium-sized enterprises (SMEs), andthat’s what I observed in my analysis.
JS: Is there any study on how the size of a firm

impacts its export performance?

Makioka: It is known that productivity would impact the size of thefirm, namely a higher productivity firm would be larger. With highproductivity, a firm would have an incentive to produce more andemploy more workers and export more eventually.

Data Availability & EBPM

utilization of an export promotion policy and export performance,
you cannot easily make any distinction between a case where theexporting company tends to use policy support (reverse causality)
and a case where an export promotion policy works well inencouraging exports. To overcome this challenge, I used a method ofmatching rather than the method of instrumental variables, because
it was difficult to get data enabling us to use the method ofinstrumental variables.
JS: EBPM has been adopted today with the increased

availability of real time data. In other words, this is anattempt to raise the accuracy of the analysis of apolicy impact by taking advantage of such data.

Makioka: Yes, that is true. I think EBPM and a wide range of
database accommodations have been in progress simultaneously.
JS: For example, the availability of micro businessdata on business behavior was fairly limited,
compared with data on a nation or a region, but is
now much improved.

Makioka: Yes. Business data are much more available today than inthe past. In my research on export promotion policy, I used businessdata from government statistics, as it has been available since the1990s and also used data from JETRO on their exhibitions orbusiness matching events. My analysis is based on these two kindsof data combined.

JS: To evaluate the effect of an export promotion

JS: The government’s data on micro business are of aMakioka: In the method of instrumental variables, you selectinformation that could affect a company’s decision to have thesupport of an export promotion policy but that would not directly
affect its decision to export, and then detect cause and effectrelations between the policy and the performance by using thisinformation. Even if there is observed a positive correlation between

Makioka: It is true that there is a time lag in government data. At thismoment, the available government collected data are for FY 2018 or
2019. It is difficult for us to make a real-time analysis based onthem. In my analysis on export promotion policy as well, I felt it
difficult to achieve an up-to-date analysis due to this limited real-timedata availability. We could have data on an individual company’s
export performance but it was necessary to observe theconfidentiality of the data in light of a firm’s privacy protection.

policy, comparison of firms’ export performances
under conditions with other background factors
being equal is what you chose in your analysis. Whatother methods would be useful? How about
instrumental variables?

structural nature and the data available are fromseveral years ago. How should we overcome thistime lag in government data?

Japan SPOTLIGHT • May / June 202221

Overall Assessment on Analysis on Export
Promotion Policy
JS: How helpful do you think your analysis would befor policy makers?

Makioka: Policy makers could learn about what types of companies
could export more with export promotion support. My analysis
concluded that JETRO’s support, such as through exhibitions, wasvery helpful in encouraging companies’ exports, which grew by
5-10% with this JETRO support, in my estimation. On the questionof the types of the companies being the biggest beneficiaries of thepolicy, in my findings smaller companies would be more encouraged
to export with such support.
Another finding is that export promotion support would work
better in particular for companies without their own international
business section. This is consistent with the assumption thatbarriers to information on exports are a crucial impediment toexporting. On the question of the difference of policy impact byexport destination, export promotion support has been found toencourage exports to nations far from Japan, such as those inEurope or to the United States rather than Asia. JETRO exhibitions orbusiness matching events would work well in matching Japanese
exporters with buyers far from Japan.
On the difference by sector, several studies in the literature ofexport promotion policy show that export promotion support’s effecton complicatedly assembled goods like precision machinery is moresignificant than on the goods like toys and simply assembled goods.
It is probably because the former need more difficult businessnegotiations, given the complicated nature of the goods. Export
promotion support could work well in mitigating this. Businessmatching between exporters and buyers overseas arranged by
JETRO would be very helpful in finding business partners.
JS: Would it be useful to expand EBPM analysis onexport promotion policy to the economy in general?
EBPM seems to be working well in micro policy areas
where you can point out precisely the policy’s
microeconomic impact. But expanding the analysis
to the macroeconomy in general by including its
secondary effects could end up in confusion, as it
will be difficult to distinguish the policy’s genuine

22 Japan SPOTLIGHT • May / June 2022

impact from the impact of other changes in economic
situations which are not necessarily directly related
to the policy.
Makioka: Yes. Broader impact analysis could make outcomesambiguous. For example, making a comparison between sectors
with more export promotion support and those with less would
result in insignificant outcomes, as within each sector there are asmall number of firms supported by export promotion policies and amajority of other firms that are not. Analysis of an individual firm
rather than a sector would be more meaningful. With more micro
data analysis, we would be able to have a clear policy implication.

Future of EBPM
JS: What is your view on the future of EBPM? In theJapanese government, it is now recommended to use
EBPM analysis as a means of convincing the budget
authority of the utility of the policy. With real-time Big
Data available today, EBPM would have great
potential as a catalyst for high-quality policy making.
But we would need experts on econometrics who
could communicate well with non-experts involved in
the budget allocation process. This communication
skill could be a big barrier to expansive utilization ofEBPM.

Makioka: Communication skills in convincing policy makers orpractitioners as well as economists of the utility of the policy are
crucial for EBPM. In addition, I think the government should keep
data open to researchers. At this moment, academics outside thegovernment find it rather difficult to have open access to data
belonging to public organizations. On the other hand, it is true that
there is a risk of leakage of confidential information or arbitrary useof the data in favor of those academics’ preoccupations, if the data
are available completely to researchers. Academics and thegovernment officials would have to work and collaborate closely forthe purpose of expansive use of EBPM.

Written by Naoyuki Haraoka, editor-in-chief of Japan SPOTLIGHT, with theassistance of TapeRewrite Corporation.