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Firm Size and Determinants of Foreign Direct Investment

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  • Yuko Kinoshita

    (CERGE-EI)

Abstract

This paper studies the locational determinants of foreign direct investment (FDI) by Japanese manufacturing firms in seven Asian countries by utilizing the 1993 survey data. I show that different size- groups of firms react to different factors in the host country in making the foreign investment decisions. Low labor cost and sufficient infrastructure encourage small firms to invest in a certain country while, for large firms, market size of the host country and strategic considerations (e.g. whether competitors invested in the country or not) are most important for their locational decisions. Overall, availability of cheap labor is not necessarily an important factor for Japanese FDI in Asia.

Suggested Citation

  • Yuko Kinoshita, 2001. "Firm Size and Determinants of Foreign Direct Investment," Industrial Organization 0012006, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0012006
    Note: Type of Document - Acrobat PDF; pages: 24 ; figures: Included
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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