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

  • Hayakawa, Kazunobu
  • Tsubota, Kenmei

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.

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File URL: http://ir.ide.go.jp/dspace/bitstream/2344/1086/1/ARRIDE_Discussion_No.301_hayakawa.pdf
File Function: First version, 2011
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Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 301.

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Date of creation: Jul 2011
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Publication status: Published in IDE Discussion Paper. No. 301. 2011.7
Handle: RePEc:jet:dpaper:dpaper301
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