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Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996

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  • Ito, Keiko
  • Fukao, Kyoji

Abstract

Using micro-data of the Establishment and Enterprise Census, we compile new statistics on the employment of Japanese affiliates of foreign firms at the 3-digit industry level for the year 1996. We find that the existing official statistics severely underestimate inward FDI. Nevertheless, the level of inward FDI in Japan is much lower than that in the United States. The results of our regression analyses imply that by eliminating the restrictions on inward FDI and reducing government activities, Japan can increase inward FDI in the service sector. Our results also suggest that the keiretsu do not act as an impediment to inward FDI.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 19 (2005)
Issue (Month): 3 (September)
Pages: 414-455

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Handle: RePEc:eee:jjieco:v:19:y:2005:i:3:p:414-455

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Web page: http://www.elsevier.com/locate/inca/622903

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References

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  1. Kyoji Fukao & Keiko Ito, 2003. "Foreign Direct Investment and Services Trade: The Case of Japan," NBER Chapters, in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 429-480 National Bureau of Economic Research, Inc.
  2. Fukunari Kimura & Robert E. Baldwin, 1998. "Application of a Nationality-Adjusted Net Sales and Value- Added Framework: The Case of Japan," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 49-82 National Bureau of Economic Research, Inc.
  3. Pugel, Thomas A & Kragas, Erik S & Kimura, Yui, 1996. "Further Evidence on Japanese Direct Investment in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 208-13, May.
  4. Gary R. Saxonhouse, 1993. "What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 21-43, Summer.
  5. Jonathan Eaton & Akilo Tamura, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Boston University - Institute for Economic Development 48, Boston University, Institute for Economic Development.
  6. repec:fth:michin:337 is not listed on IDEAS
  7. David E. Weinstein, 1997. "Foreign Direct Investment and Keiretsu: Rethinking U.S. and Japanese Policy," NBER Chapters, in: The Effects of U.S. Trade Protection and Promotion Policies, pages 81-116 National Bureau of Economic Research, Inc.
  8. Paprzycki,Ralph & Fukao,Kyoji, 2012. "Foreign Direct Investment in Japan," Cambridge Books, Cambridge University Press, number 9781107411289, April.
  9. David L. Carr & James R. Markusen & Keith E. Maskus, 1998. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," NBER Working Papers 6773, National Bureau of Economic Research, Inc.
  10. Peter A. Petri, 1991. "Market Structure, Comparative Advantage, and Japanese Trade under the Strong Yen," NBER Chapters, in: Trade with Japan: Has the Door Opened Wider?, pages 51-84 National Bureau of Economic Research, Inc.
  11. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
  12. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-13, August.
  13. Grubert, Harry & Mutti, John, 1991. "Taxes, Tariffs and Transfer Pricing in Multinational Corporate Decision Making," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 285-93, May.
  14. Robert Z. Lawrence, 1993. "Japan?s Low Levels of Inward Investment: The Role of Inhibitions on Acquisitions," NBER Chapters, in: Foreign Direct Investment, pages 85-112 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. ITO Keiko, 2011. "Entry of Foreign Multinational Firms and Productivity Growth of Domestic Firms: The case of Japanese firms," Discussion papers 11063, Research Institute of Economy, Trade and Industry (RIETI).
  2. Kyoji Fukao, 2004. "Do Foreign Firms Bring Greater Total Factor Productivity to Japan?," Discussion papers 04014, Research Institute of Economy, Trade and Industry (RIETI).
  3. WAKASUGI Ryuhei & TODO Yasuyuki & SATO Hitoshi & NISHIOKA Shuichiro & MATSUURA Toshiyuki & ITO Banri & TANAKA Ayumu, 2008. "The Internationalization of Japanese Firms: New Findings Based on Firm-Level Data," Discussion papers 08036, Research Institute of Economy, Trade and Industry (RIETI).
  4. Kyoji Fukao & Keiko Ito & Hyeog Ug Kwon & Miho Takizawa, 2008. "Cross-Border Acquisitions and Target Firms' Performance: Evidence from Japanese Firm-Level Data," NBER Chapters, in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy (NBER-EASE Volume 17), pages 347-389 National Bureau of Economic Research, Inc.
  5. Fukao, Kyoji & Ito, Keiko & Kwon, Hyeog Ug, 2005. "Do out-in M&As bring higher TFP to Japan? An empirical analysis based on micro-data on Japanese manufacturing firms," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 272-301, June.
  6. Serge REY & Jacques JAUSSAUD, 2012. "FDI to Japan and Trade Flows: A Comparison of BRICs, Asian Tigers and Developed Countries," Working Papers 2011-2012_6, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Mar 2012.
  7. 深尾, 京司, 2002. "黒字大国終焉論の誤解," Discussion Paper 97, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.

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