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Global Production Sharing and FDI-Trade Nexus: New Evidence from the Japanese Automobile Industry

  • Shuhei Nishitateno

The growing importance of global production sharing makes the analysis of the nexus between outward foreign direct investment (FDI) and trade in intermediate goods ever more important. This study examines the substitution hypothesis that FDI by upstream firms replaces intermediate exports from home, using the case of the Japanese automobile industry. In analysing newly-constructed product-level data covering 37 products and 49 host countries over the period 1999 to 2008, this study finds a complementary relationship between these two variables. The findings cast doubt on the popular view that the growing overseas activity of multinational enterprises could replace intermediate exports from a home country thereby depriving the locals of job opportunities and deindustrialising the domestic economy under ongoing global production sharing.

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File URL: https://crawford.anu.edu.au/pdf/pep/apep-397.pdf
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Paper provided by Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University in its series Asia Pacific Economic Papers with number 397.

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Length: 31 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:csg:ajrcau:397
Contact details of provider: Postal: Canberra ACT 2601
Phone: (61-2) 6249 3780
Fax: (61-2) 6249 3941
Web page: https://crawford.anu.edu.au/research_units/ajrc/
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  8. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
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