IDEAS home Printed from
   My bibliography  Save this paper

How Does FDI Affect Performance at Home? An Activity-level Analysis for Japanese Electrical Machinery and Electronics Firms


  • Toshiyuki Matsuura

    (The Institute for Economic and Industrial Studies, Keio University, Japan)

  • Kazuyuki Motohashi

    (Department of Technology Management for Innovation, School of Engineering, The University of Tokyo, Japan; Research Institute of Economy, Trade and Industry, Japan)

  • Kazunobu Hayakawa

    (Inter-Disciplinary Studies Center, Institute of Developing Economies, Japan; Research Institute of Economy, Trade and Industry, Japan)


Focusing on firms from the electrical machinery and electronics industry, this paper investigates the impact of foreign direct investment (FDI) on home productivity using activity-level data rather than, as most previous studies have done, firm-level data. Distinguishing between horizontal and vertical FDI (HFDI and VFDI), it is argued that VFDI changes the activities that firms are engaged in at home after the relocation of production, altering firms' production function. This means that a direct comparison of productivity at the firm-level before and after the relocation of production is inappropriate. Instead, in order to assess the impact of FDI on home productivity, it is necessary to use activity-level data. Doing so, we obtain results that are consistent with theoretical predictions: HFDI does not necessarily have a significant positive effect on home productivity in activities that parallel those conducted by affiliates abroad. On the other hand, VFDI significantly enhances productivity in activities that have an input-output relationship with the activity relocated abroad.

Suggested Citation

  • Toshiyuki Matsuura & Kazuyuki Motohashi & Kazunobu Hayakawa, 2009. "How Does FDI Affect Performance at Home? An Activity-level Analysis for Japanese Electrical Machinery and Electronics Firms," Keio/Kyoto Joint Global COE Discussion Paper Series 2009-002, Keio/Kyoto Joint Global COE Program.
  • Handle: RePEc:kei:dpaper:2009-002

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ralph Paprzycki & Keiko Ito, 2010. "Investment, Production and Trade Networks as Drivers of East Asian Integration," Global COE Hi-Stat Discussion Paper Series gd09-117, Institute of Economic Research, Hitotsubashi University.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kei:dpaper:2009-002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Global COE Program Office). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.