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Firm Heterogeneity and the Activity of Japanese Manufacturing Multinationals in India

Author

Listed:
  • Hiroyuki Nishiyama

    (School of Economics, University of Hyogo, Japan)

  • Azusa Fujimori

    (Faculty of Management, Osaka Seikei University, Japan)

  • Takahiro Sato

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper anatomizes the linkage between country/region characteristics and Japanese MNE activity in India from both theoretical and empirical sides. We construct a North-South firm-heterogeneity model with FDI and exchange rate. We use this model to make three contributions: First, we theoretically reveal how country characteristics affect the average sales of the firm in the host country. Secondly, we make clear the state-level characteristics on three main industrialized areas in India using the data from some valuable databases. Thirdly, we estimate determinant factors of average sales of each Japanese affiliate firms in India focusing on regional characteristics derived in the theoretical part using firm-level data. We also construct several proxy variables of determinant factors of average sales in state-level and put into estimated regression equation. This empirical analysis targets at the 1990s and 2000s. Over this period, India enjoyed steady economic growth and it can be linked with increase of FDI inflow and technological spillover from MNEs. We find out that some regional characteristics such as level of human-capital or transportation cost in each state and also exchange rate have a significant effect on average sales of each Japanese affiliate firms in India.

Suggested Citation

  • Hiroyuki Nishiyama & Azusa Fujimori & Takahiro Sato, 2019. "Firm Heterogeneity and the Activity of Japanese Manufacturing Multinationals in India," Discussion Paper Series DP2019-06, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2019-06
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2019-06.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm heterogeneity; foreign direct investment; India; Japanese multinational enterprises;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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