EXCHANGE RATE VOLATILITY AND MNCs' PRODUCTION AND DISTRIBUTION NETWORKS: THE CASE OF JAPANESE MANUFACTURING MNCs
AbstractThis paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.
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Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal The Singapore Economic Review.
Volume (Year): 53 (2008)
Issue (Month): 03 ()
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- Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Trade Working Papers 23216, East Asian Bureau of Economic Research.
- ANDO Mitsuyo & KIMURA Fukunari, 2013. "Trade Adjustments to Exchange Rate Changes by Japanese Manufacturing MNEs: Intra-firm and arm's length transactions," Discussion papers 13023, Research Institute of Economy, Trade and Industry (RIETI).
- ANDO Mitsuyo & IRIYAMA Akie, 2009. "International Production Networks and Export/Import Responsiveness to Exchange Rates: The case of Japanese manufacturing firms," Discussion papers 09049, Research Institute of Economy, Trade and Industry (RIETI).
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