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Quantitative Evaluation of Determinants of Export and FDI: Firm-level evidence from Japan

  • TODO Yasuyuki

This paper examines determinants of the export and FDI decision, using firm-level data for Japan. Contributions of this paper are twofold. First, this paper employs a mixed logit model to incorporate unobserved characteristics of firms. Second, special attention is paid to quantitative evaluation of effects of the covariates. We find that the impact of productivity on the export and FDI decision is positive and statistically significant but economically negligible in size, despite the theoretical prediction of recent heterogeneous-firm trade models. The impact of the firm size and information spillovers from experienced neighboring firms in the same industry are also positive but small in size. Quantitatively, the dominant determinants of the export and FDI decision are firms' status on internationalization in the previous year and unobserved firm characteristics. The evidence suggests that there may be some kind of inefficiency in the selection process of exporters and FDI firms.

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File URL: http://www.rieti.go.jp/jp/publications/dp/09e019.pdf
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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 09019.

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Length: 35 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:eti:dpaper:09019
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  1. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  2. Aitken, Brian & Hanson, Gordon H. & Harrison, Ann E., 1997. "Spillovers, foreign investment, and export behavior," Journal of International Economics, Elsevier, vol. 43(1-2), pages 103-132, August.
  3. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  4. Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(4), pages 695-719, December.
  5. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. James Levinsohn & Steven Berry & Ariel Pakes, 1999. "Voluntary Export Restraints on Automobiles: Evaluating a Trade Policy," American Economic Review, American Economic Association, vol. 89(3), pages 400-430, June.
  7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  8. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  9. Keith Head & John Ries, 2003. "Heterogeneity and the FDI versus Export Decision of Japanese Manufacturers," NBER Working Papers 10052, National Bureau of Economic Research, Inc.
  10. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer, vol. 43(3), pages 135-148, May.
  11. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-77, December.
  12. BARRIOS, Salvador & GÖRG, Holger & STROBL, Eric, . "Explaining firms' export behaviour: R&D, spillovers and the destination market," CORE Discussion Papers RP -1654, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Johannesson, Magnus & Lundin, Douglas, 2001. "The Impact of Physician Preferences and Patient Habits on the Diffusion of New Drugs," SSE/EFI Working Paper Series in Economics and Finance 460, Stockholm School of Economics, revised 12 Aug 2002.
  14. Greenaway, David & Sousa, Nuno & Wakelin, Katharine, 2004. "Do domestic firms learn to export from multinationals?," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1027-1043, November.
  15. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  16. Andrew B. Bernard & Joachim Wagner, 1998. "Export Entry and Exit by German Firms," NBER Working Papers 6538, National Bureau of Economic Research, Inc.
  17. Eiichi Tomiura, 2005. "Foreign Outsourcing, Exporting, and FDI: A Productivity Comparison at the Firm Level," Discussion Paper Series 168, Research Institute for Economics & Business Administration, Kobe University.
  18. Manova, Kalina, 2008. "Credit constraints, equity market liberalizations and international trade," Journal of International Economics, Elsevier, vol. 76(1), pages 33-47, September.
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