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Technological Capabilities and Japanese Foreign Direct Investment in the United States


  • Kogut, Bruce
  • Chang, Sea Jin


This article examines the effect of relative technological capabilities on Japanese direct investment into the United States by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R & D capability and industry structure on a count measure of Japanese entries across 297 industries. The results indicate that Japanese direct investment in the United States is drawn to industries intensive in R & D expenditures summed across both countries; voluntary restraints on Japanese exports encourage direct investment. When the entries are disaggregated by mode (e.g., new plant or acquisition), there is a significant indication that joint ventures are used for the sourcing and sharing of U.S. technological capabilities. Copyright 1991 by MIT Press.

Suggested Citation

  • Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-413, August.
  • Handle: RePEc:tpr:restat:v:73:y:1991:i:3:p:401-13

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