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Reconsidering the Backward Vertical Linkages of Foreign Affiliates: Evidence from Japanese Multinationals

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  • Kiyota, Kozo
  • Matsuura, Toshiyuki
  • Urata, Shujiro
  • Wei, Yuhong

Abstract

Summary This paper examines the determinants of the backward vertical linkages of Japanese foreign affiliates in manufacturing for the period 1994-2000, focusing on the local backward linkages, or local procurement in the host country. Our major findings are twofold. First, the unobserved affiliate-specific characteristics explain the large part of the variation of the backward linkages among foreign affiliates. Second, the experience of the affiliate has positive and sometimes nonlinear effects on local procurement for the affiliates, especially in Southeast Asia and China.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 36 (2008)
Issue (Month): 8 (August)
Pages: 1398-1414

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Handle: RePEc:eee:wdevel:v:36:y:2008:i:8:p:1398-1414

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References

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  1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
  2. Susan E. Feinberg & Michael P. Keane, 2001. "U.S.-Canada Trade Liberalization And Mnc Production Location," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 118-132, February.
  3. Kozo Kiyota & Toshiyuki Matsuura & Shujiro Urata & Yuhong Wei, 2005. "Reconsidering the Backward Vertical Linkage of Foreign Affiliates: Evidence from Japanese Multinationals," Discussion papers 05019, Research Institute of Economy, Trade and Industry (RIETI).
  4. Kozo Kiyota & Shujiro Urata, 2007. "The Role of Multinational Firms in International Trade: The Case of Japan," Working Papers 560, Research Seminar in International Economics, University of Michigan.
  5. David Hummels & Jun Ishii & Kei-Mu Yi, 1999. "The nature and growth of vertical specialization in world trade," Staff Reports 72, Federal Reserve Bank of New York.
  6. Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
  7. Hsiao,Cheng, 2003. "Analysis of Panel Data," Cambridge Books, Cambridge University Press, number 9780521522717, April.
  8. Lowe, Nichola & Kenney, Martin, 1999. "Foreign Investment and the Global Geography of Production: Why the Mexican Consumer Electronics Industry Failed," World Development, Elsevier, vol. 27(8), pages 1427-1443, August.
  9. René Belderbos & Giovanni Capannelli & Kyoji Fukao, 2000. "The Local Content of Japanese Electronics Manufacturing Operations in Asia," NBER Chapters, in: The Role of Foreign Direct Investment in East Asian Economic Development, NBER-EASE Volume 9, pages 9-47 National Bureau of Economic Research, Inc.
  10. Kelegama, Saman & Foley, Fritz, 1999. "Impediments to Promoting Backward Linkages from the Garment Industry in Sri Lanka," World Development, Elsevier, vol. 27(8), pages 1445-1460, August.
  11. Belderbos, Rene & Capannelli, Giovanni & Fukao, Kyoji, 2001. "Backward Vertical Linkages of Foreign Manufacturing Affiliates: Evidence from Japanese Multinationals," World Development, Elsevier, vol. 29(1), pages 189-208, January.
  12. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2005. "Vertical Production Networks in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 664-678, November.
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Citations

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Cited by:
  1. Inui, Tomohiko & Matsuura, Toshiyuki & Pocet, Sandra, 2008. "The Location of Japanese MNCs Affiliates: Agglomeration Spillovers and Firm Heterogeneity," Discussion Paper Series a506, Institute of Economic Research, Hitotsubashi University.
  2. MATSUURA Toshiyuki & MOTOHASHI Kazuyuki & HAYAKAWA Kazunobu, 2008. "How Does FDI in East Asia Affect Performance at Home?: Evidence from Electrical Machinery Manufacturing Firms," Discussion papers 08034, Research Institute of Economy, Trade and Industry (RIETI).
  3. Lucia Pérez-Villar & Adnan Seric, 2014. "Multinationals in Sub-Saharan Africa: Domestic Linkages and Institutional Distance," Kiel Working Papers 1893, Kiel Institute for the World Economy.
  4. Anderson, Kym & Strutt, Anna, 2012. "Agriculture and Food Security in Asia by 2030," ADBI Working Papers 368, Asian Development Bank Institute.
  5. Hayakawa, Kazunobu, 2012. "Does the use of multiple FTAs force firms to raise local input share? : evidence of the spaghetti bowl phenomenon," IDE Discussion Papers 364, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  6. Vito Amendolagine & Nicola D. Coniglio, 2014. "Economic Enclaves or Bridges to the Global Economy? Foreign and Diaspora Investments in Developing Countries," RSCAS Working Papers 2014/10, European University Institute.
  7. 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).
  8. Codruța Dura & Oana Dobre-Baron, 2011. "Analysis of Foreign Direct Investments Engaged by Japanese Multinational Companies," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(2), pages 81-92.
  9. Keiko Ito & Kyoji Fukao, 2010. "Determinants of the Profitability of Japanese Manufacturing Affiliates in China and Other Regions: Does Localisation of Procurement, Sales and Management Matter?," The World Economy, Wiley Blackwell, vol. 33(12), pages 1639-1671, December.
  10. MATSUURA Toshiyuki & ITO Banri, 2009. "Intra-firm Trade and Contract Completeness: Evidence from Japanese affiliate firms," Discussion papers 09026, Research Institute of Economy, Trade and Industry (RIETI).
  11. Simona, Gentile-Lüdecke & Axèle, Giroud, 2012. "Knowledge Transfer from TNCs and Upgrading of Domestic Firms: The Polish Automotive Sector," World Development, Elsevier, vol. 40(4), pages 796-807.
  12. Anderson, Kym & Strutt, Anna, 2012. "Asia’s Growth, the Changing Geography of World Trade, and Food Security: Projections to 2030," CEPR Discussion Papers 8950, C.E.P.R. Discussion Papers.
  13. Kozo Kiyota & Toshiyuki Matsuura & Shujiro Urata & Yuhong Wei, 2007. "Reconsidering the Backward Vertical Linkages of Foreign Affiliates: Evidence from Japanese Multinationals," Working Papers 563, Research Seminar in International Economics, University of Michigan.
  14. Amendolagine, Vito & Boly, Amadou & Coniglio, Nicola Daniele & Prota, Francesco & Seric, Adnan, 2013. "FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 50(C), pages 41-56.
  15. Jordaan, Jacob A., 2011. "FDI, Local Sourcing, and Supportive Linkages with Domestic Suppliers: The Case of Monterrey, Mexico," World Development, Elsevier, vol. 39(4), pages 620-632, April.
  16. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2014. "Firm-level impacts of natural disasters on production networks : evidence from a flood in Thailand," IDE Discussion Papers 445, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  17. Giroud, Axèle & Scott-Kennel, Joanna, 2009. "MNE linkages in international business: A framework for analysis," International Business Review, Elsevier, vol. 18(6), pages 555-566, December.
  18. Anderson, Kym & Strutt, Anna, 2012. "Global food markets by 2030: What roles for farm TFP growth and trade policies?," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124192, Australian Agricultural and Resource Economics Society.

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