FDI-Trade Nexus: New Evidence from Product-Level Data
AbstractThe difficulty in finding the substitution effects on exports of foreign direct investment has posed challenges to empirical analysts. In analysing newly-constructed product-level data that enable endogeneity and aggregation bias to be addressed simultaneously, this study finds that auto part exports from Japan are positively correlated with overseas operations by Japanese automakers but negatively correlated with overseas operations by Japanese suppliers. However, the evidence on the latter is rather weak consistent with the fact that Japanese suppliers predominantly sell their products to Japanese automakers at the initial stage but that they are expanding their business with non-Japanese firms in host countries over time.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd11-225.
Date of creation: Feb 2012
Date of revision:
Foreign Direct Investments; Trade; Automobile; Japan;
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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