Analysis of Rebuilding the Supply Chain in RCEP Region—From the Perspective of New-Economic Geography

Japanese manufacturing companies have been expanding their production networks in Southeast Asia. Especially since the AEC was launched in 2015, they have been building supply chains in the ASEAN region, and their local production in those countries is increasing year by year. For Japanese SMEs in particular, aggressive overseas development of trade and investment have been progressing because such an approach could be one of the measures against market contraction in Japan due to population decline. That is also a growth strategy via development of sales channels to overseas markets where demand is set to increase. In “The Spatial Economy”, Paul Krugman argues that lower transportation costs as a result of reductions in custom duties will enable Japanese manufacturers to engage in geographically multi-polar development in their overseas business development. We outline that analysis assuming RCEP to be a very hopeful framework to expand economic welfare in the Asia Pacific.