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Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan

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  • Fukunari Kimura
  • Kozo Kiyota

Abstract

This paper utilizes micro-panel data for firms located in Japan and examines differences in 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. Moreover, foreign investors appear to invest in firms that may not be immediately profitable, but those that are potentially the most profitable in the future. There is also no evidence that foreign investor is "foot-loose." These imply that foreign investors bring useful firm-specific assets into the Japanese market, which may work as an effective catalyst for necessary structural reform. Copyright © 2006 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Fukunari Kimura & Kozo Kiyota, 2007. "Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 31-48, February.
  • Handle: RePEc:bla:rdevec:v:11:y:2007:i:1:p:31-48
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    1. Blomstrom, Magnus & Gangnes, Byron & La Croix, Sumner (ed.), 2001. "Japan's New Economy: Continuity and Change in the Twenty-First Century," OUP Catalogue, Oxford University Press, number 9780199241736.
    2. Shang-Jin Wei, 1996. "Foreign Direct Investment in China: Sources and Consequences," NBER Chapters,in: Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5, pages 77-105 National Bureau of Economic Research, Inc.
    3. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
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