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Judging Japan's FDI: The verdict from a dartboard model

Listed author(s):
  • Head, Keith
  • Ries, John

We evaluate Japan's inward and outward FDI performance using theoretical benchmarks based on the premise that management teams headquartered around the world bid for the production facilities located in each country. Our model incorporates the assumption that bids are inversely proportionate to distance. It accurately predicts the multilateral shares of FDI stocks for most important countries. The theory predicts lower shares of FDI for Japan than its share of the world economy. Japan's actual share of outward FDI exceeds its inward share -as the model predicts- but both currently lie below the benchmark predictions.

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File URL: http://www.sciencedirect.com/science/article/pii/S0889-1583(05)00023-7
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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 19 (2005)
Issue (Month): 2 (June)
Pages: 215-232

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Handle: RePEc:eee:jjieco:v:19:y:2005:i:2:p:215-232
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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  1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, July.
  2. Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
  3. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
  4. Jonathan Eaton & Akiko Tamura, 1996. "Japanese and U.S. Exports and Investment as Conduits of Growth," NBER Chapters, in: Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5, pages 51-75 National Bureau of Economic Research, Inc.
  5. Gary R. Saxonhouse, 1993. "What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 21-43, Summer.
  6. Harrigan, James & Vanjani, Rohit, 2003. "Is Japan's trade (still) different?," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 507-519, December.
  7. Deardorff, Alan V., 2005. "Trade and location: A moving example motivated by Japan," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 169-193, June.
  8. Keith Head & John Ries & Barbara J. Spencer, 2004. "Vertical Networks and US Auto Parts Exports: Is Japan Different?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 37-67, 03.
  9. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  10. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
  11. repec:fth:michin:337 is not listed on IDEAS
  12. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
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