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Productivity Spillovers and the Entry of Foreign-Owned Firms: The Case of Japanese Manufacturing Firms

Author

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  • Yukako Murakami
  • Kyoji Fukao

Abstract

This paper shows that in the short run an increase in foreign firms' industry share lowers the TFP growth of Japanese firms as a result of the decrease in market power. However, in the long run, the entry of foreign-owned firms has a positive effect on the productivity of local firms as a result of technology spillovers. In addition, the results suggest that foreign firms exert competitive pressure that forces Japanese firms with a high level of technological capabilities raise their productivity growth.

Suggested Citation

  • Yukako Murakami & Kyoji Fukao, 2006. "Productivity Spillovers and the Entry of Foreign-Owned Firms: The Case of Japanese Manufacturing Firms," Hi-Stat Discussion Paper Series d06-192, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:hstdps:d06-192
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    File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2006/pdf/D06-192.pdf
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    Cited by:

    1. Murakami, Yukako, 2007. "Technology spillover from foreign-owned firms in Japanese manufacturing industry," Journal of Asian Economics, Elsevier, vol. 18(2), pages 284-293, April.

    More about this item

    Keywords

    Technology Spillovers; Market Power; FDI; Productivity; Absorptive Capacity;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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