This paper utilizes micro-panel data for firms located in Japan and examines differences in static and dynamic corporate performance between foreign-owned and domestically-owned firms in the 1990s. We find that foreign-owned firms not only reflect superior static characteristics but also achieve faster growth. In addition, foreign investors appear to invest in firms that may not be immediately profitable now but those that are potentially the most profitable in the future. The results imply that foreign investors bring useful firm-specific assets into the Japanese market, which may work as an effective catalyst for necessary structural reform.
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number
510.
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Kyoji Fukao & Keiko Ito, 2003.
"Foreign Direct Investment and Services Trade: The Case of Japan,"
NBER Chapters,
in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 429-480
National Bureau of Economic Research, Inc.
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