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

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

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://hi-stat.ier.hit-u.ac.jp/research/discussion/2004/pdf/D04-58.pdf
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-58.

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Date of creation: Dec 2004
Handle: RePEc:hst:hstdps:d04-58
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  1. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
  2. Jonathan Eaton & Akilo Tamura, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Boston University - Institute for Economic Development 48, Boston University, Institute for Economic Development.
  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, 1995. "Japanese and U.S. Exports and Investment as Conduits of Growth," Boston University - Institute for Economic Development 70, Boston University, Institute for Economic Development.
  5. Saxonhouse, G.R., 1993. "What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?," Working Papers 337, Research Seminar in International Economics, University of Michigan.
  6. James Harrigan & Rohit Vanjani, 2003. "Is Japan's Trade (still) Different?," NBER Working Papers 10058, National Bureau of Economic Research, Inc.
  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, 2002. "Vertical Networks and US Auto Parts Exports: Is Japan Different?," NBER Working Papers 9162, National Bureau of Economic Research, Inc.
  9. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  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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