Reputation in International Trade: Evidence From the Fukushima Nuclear Disaster

ABSTRACT A country's reputation may be an important determinant of its ability to export, but the effect is difficult to isolate from underlying product attributes. We consider the trade impact of the Fukushima nuclear disaster and ask whether damage to the Japanese reputation for food safety played a role in its impact. The disaster led to a large and prolonged reduction in Japanese food export value to the EU by up to 40% immediately following the disaster, compared to products from other East Asian countries, with many products ceasing to be exported for up to four years. Since radiation exposure, capacity destruction, and trade restrictions varied by product and prefecture, we use agricultural production data to identify products unlikely to be affected by these negative supply shocks. Such products still exhibit a sizeable reduction in exports, suggesting that a change in the perceived riskiness of Japanese products in the eyes of foreign consumers could have shaped the trade reaction.