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Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy

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  • Kuchiki, Akifumi

Abstract

This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.

Suggested Citation

  • Kuchiki, Akifumi, 2005. "Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy," IDE Discussion Papers 33, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper33
    as

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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=38132&item_no=1&attribute_id=22&file_no=1
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    References listed on IDEAS

    as
    1. Solow, Robert M. & Vickrey, William S., 1971. "Land use in a long narrow city," Journal of Economic Theory, Elsevier, vol. 3(4), pages 430-447, December.
    2. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 2002. "Taste heterogeneity, labor mobility and economic geography," Journal of Development Economics, Elsevier, vol. 69(1), pages 155-177, October.
    3. Tabuchi, Takatoshi & Thisse, Jacques-François & Zeng, Dao-Zhi, 2002. "On the Number and Size of Cities," CEPR Discussion Papers 3386, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Flowchart approach; Industrial cluster policy; Capacity building; Institutions; Exchange rate; Country risk; Corporate tax rate; Foreign investments; Industrial policy; Econometric model; International business enterprises; Asia; East Asia; Southeast Asia; 国際投資; 産業政策; 経済モデル; 世界企業; 多国籍企業; アジア; 東アジア; 東南アジア;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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