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Institutional Determinants of Japanese Outward FDI in the Manufacturing Industry

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  • Raphaël Chiappini

    (University of Nice Sophia Antipolis, France
    GREDEG CNRS)

Abstract

This paper explores the relationship between six indicators of governance and outward foreign direct investment (FDI) in the Japanese manufacturing industry. We estimate a gravity model of FDI for 30 host countries covering the period 2005-2011, employing Heckman's two-step sample selection correction in order to tackle the issue of zero-value observations. The results indicate that Japanese overseas investments are driven by host market size, yen real exchange rate, macroeconomic stability, resource endowments and policy variables. In particular, we find that confidence societal rules, control of corruption, government effectiveness, political stability and private sector policies are important factors driving FDI.

Suggested Citation

  • Raphaël Chiappini, 2014. "Institutional Determinants of Japanese Outward FDI in the Manufacturing Industry," GREDEG Working Papers 2014-11, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2014-11
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    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2014-11.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Outward foreign direct investment (FDI); institutions; gravity model; Heckman sample selection model;

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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