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Firm Heterogeneity and FDI in Distribution Services

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  • Kiyoyasu Tanaka

Abstract

Distribution services play a large role in intermediating production and consumption across borders. Using firm-level data on Japanese multinationals in the wholesale and retail sectors, this paper examines foreign direct investment (FDI) decisions of distribution firms for local distribution services at the extensive and intensive margin. Consistent with the model of heterogeneous firms on multinational production, productive multinationals are more likely than less productive ones to enter a larger number of markets, penetrate less attractive markets, and generate larger sales per market. While these findings are consistent with previous evidence on manufacturing multinationals, there are some distinctive determinants of FDI in distribution services.
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Suggested Citation

  • Kiyoyasu Tanaka, 2015. "Firm Heterogeneity and FDI in Distribution Services," The World Economy, Wiley Blackwell, vol. 38(8), pages 1295-1311, August.
  • Handle: RePEc:bla:worlde:v:38:y:2015:i:8:p:1295-1311
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    Cited by:

    1. ITO Yukiko, 2015. "Are There Trade-offs between the Existing and New Foreign Activities?," Discussion papers 15101, Research Institute of Economy, Trade and Industry (RIETI).

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