Trade Liberalization and FDI Strategy in Heterogeneous Firms: Evidence from Japanese firm-level data
AbstractThis paper attempts to clarify the reasons for the rapid growth of FDI in developing countries, particularly East Asian countries, compared with that of FDI to developed countries. To do this, we will examine the mechanics of HFDI and VFDI with shedding light on the role of trade costs. Our empirical analysis by estimation of a multinomial logit model of Japanese firms' FDI choices reveals that the reduction of tariff rates attracts even less productive VFDI firms. In contrast, their rise attracts even less productive HFDI firms. Since developing countries, particularly East Asian countries, have experienced a relatively rapid decrease in tariff rates, our results indicate that the increase of VFDI through tariff rate reduction has led to the recent relative surge of FDIs in developing countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 11033.
Length: 32 pages
Date of creation: Mar 2011
Date of revision:
Contact details of provider:
Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
Web page: http://www.rieti.go.jp/
More information through EDIRC
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko).
If references are entirely missing, you can add them using this form.