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Do international flights promote FDI? The role of face‐to‐face communication

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  • Kiyoyasu Tanaka

Abstract

International passenger flights facilitate business travel for in‐person meetings abroad. However, the significance of face‐to‐face communication (FFC) is not clear. To identify the FFC channel, this paper examines whether flights promote FDI more strongly for multinational firms that face relatively intensive FFC in foreign production. Expatriate employees are used as a proxy for the FFC intensity. Using firm‐level data on Japanese multinational firms for the period 1989 to 2006, I show that more frequent flights increase new FDI entry, with the larger positive effects for multinationals in high FFC sectors. The results support the FFC channel to connect flights and FDI.

Suggested Citation

  • Kiyoyasu Tanaka, 2019. "Do international flights promote FDI? The role of face‐to‐face communication," Review of International Economics, Wiley Blackwell, vol. 27(5), pages 1609-1632, November.
    • Handle: RePEc:bla:reviec:v:27:y:2019:i:5:p:1609-1632
    DOI: 10.1111/roie.12437
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    Cited by:

    1. Oum, Tae Hoon & Wu, Xiangru & Wang, Kun, 2024. "Impact of air connectivity on bilateral service export and import trade: The case of China," Transport Policy, Elsevier, vol. 148(C), pages 219-233.
    2. Bono, Pierre-Henri & David, Quentin & Desbordes, Rodolphe & Py, Loriane, 2022. "Metro infrastructure and metropolitan attractiveness," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    3. Zerun Jin & Zitian Cui & Shengjun Zhu & Liyan Xu, 2024. "Face-to-face contact and university–industry collaboration: evidence from mobile signaling data in Beijing," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(4), pages 1255-1276, April.
    4. Oum, Tae Hoon & Wang, Kun & Yan, Jia, 2019. "Measuring the effects of open skies agreements on bilateral passenger flow and service export and import trades," Transport Policy, Elsevier, vol. 74(C), pages 1-14.
    5. Naoto JINJI & Shigenobu KAWAGUCHI, 2026. "The Impact of Global Sanctions on Foreign Direct Investment: A staggered difference-in-differences approach," Discussion papers 26032, Research Institute of Economy, Trade and Industry (RIETI).
    6. Xue BAI & Hong MA & Ryo MAKIOKA, 2022. "The Values of Export Promotion: The case of the canton fair during the SARS epidemic," Discussion papers 22078, Research Institute of Economy, Trade and Industry (RIETI).
    7. Sun, Xinyu & Yan, Sen & Liu, Tao & Wang, Jiayin, 2023. "The impact of high-speed rail on urban economy: Synergy with urban agglomeration policy," Transport Policy, Elsevier, vol. 130(C), pages 141-154.
    8. Tanaka, Kiyoyasu, 2023. "What hinders digital communication? Evidence from foreign firms in Japan," Japan and the World Economy, Elsevier, vol. 66(C).
    9. Carril-Caccia, Federico, 2025. "The impact of economic sanctions on bilateral mergers and acquisitions," European Journal of Political Economy, Elsevier, vol. 86(C).
    10. Wei, Hao & Liu, Yuan, 2026. "New international flight routes and MNCs' investment," Journal of Corporate Finance, Elsevier, vol. 96(C).
    11. Zhu, Zhenran & Zhang, Anming & Zhang, Yahua, 2018. "Connectivity of intercity passenger transportation in China: A multi-modal and network approach," Journal of Transport Geography, Elsevier, vol. 71(C), pages 263-276.
    12. Lisha He & Mia M Bennett & Ronghao Jiang, 2022. "The uneven geography of real estate investment by Mainland Chinese state-owned and private enterprises in the U.S.: Local market conditions, migration, and ethnic networks," Environment and Planning A, , vol. 54(4), pages 653-675, June.
    13. Zovanga Kone & Feicheng Wang & Zheng Wang & Zhuo Zhou, 2024. "Business as usual? Unraveling the impact of Brexit on UK‐EU business links," Contemporary Economic Policy, Western Economic Association International, vol. 42(4), pages 623-641, October.
    14. Banri Ito & Katsunori Shirai, 2024. "City-specific determinants of cross-border M&As: an inter-urban gravity approach," International Economics and Economic Policy, Springer, vol. 21(1), pages 65-88, February.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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