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Location choice in low-income countries : evidence from Japanese investments in East Asia

Author

Listed:
  • Hayakawa, Kazunobu
  • Tsubota, Kenmei

Abstract

Unlike most existing studies, this paper examines the location choices of MNEs in developing countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model at the province level. Noteworthy results of location elements are as follows. As is consistent with the mechanics of cheap labor-seeking FDI, Japanese MNEs are more likely to invest in locations with low income and low tariff rates on products from Japan. Also, accessibility to other locations and/or ports matters in attracting Japanese MNEs because it is crucial in importing materials and exporting their products. In addition, WTO membership and bilateral investment treaties are important because these contribute to the settlement of trade and investment disputes, which is more likely to be necessary in developing countries.

Suggested Citation

  • Hayakawa, Kazunobu & Tsubota, Kenmei, 2011. "Location choice in low-income countries : evidence from Japanese investments in East Asia," IDE Discussion Papers 301, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper301
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2015. "Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 244-259.
    2. PHOLO Alain & TENIKUE Michel & NAFARI Baraka, 2017. "Market Potential, Agglomeration Effects and the Location of French Firms in Africa," LISER Working Paper Series 2017-19, LISER.
    3. Hecht, Veronika, 2015. "Location choice of German multinationals in the Czech Republic : the importance of agglomeration economies," IAB Discussion Paper 201519, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. repec:bla:etrans:v:25:y:2017:i:4:p:593-623 is not listed on IDEAS

    More about this item

    Keywords

    Southeast Asia; China; Japan; Malaysia; Indonesia; Cambodia; Laos; Myanmar; Vietnam; Thailand; Philippines; Foreign investments; Industrial management; Location Choice; Multinational Firms; Nested-logit Model;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • 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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