IDEAS home Printed from https://ideas.repec.org/p/kei/dpaper/2010-008.html

Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia

Author

Listed:
  • Kazunobu Hayakawa

    (Inter-disciplinary Studies Center, Institute of Developing Economies)

  • Toshiyuki Matsuura

    (Institute of Economic and Industrial Studies, Keio University)

Abstract

In this study, we statistically test the validity of the mechanics of complex vertical foreign direct investment (VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From the theoretical viewpoint, in complex VFDI, the production activity of affiliates in a given country is positively related to that in neighboring countries that have large differences in factor prices with the given country. Our empirical results show that such mechanics of complex VFDI work in Japanese FDI to East Asia, and that they work more strongly in those MNEs with higher productivity. These results have important implications on the policies of developing countries in attracting FDI.

Suggested Citation

  • Kazunobu Hayakawa & Toshiyuki Matsuura, 2010. "Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia," Keio/Kyoto Joint Global COE Discussion Paper Series 2010-008, Keio/Kyoto Joint Global COE Program.
    • Handle: RePEc:kei:dpaper:2010-008
    as

    Download full text from publisher

    File URL: https://ies.keio.ac.jp/old_project/old/gcoe-econbus/pdf/dp/DP2010-008.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. Kenji Nozaki, 2016. "Progress in Intra-industry Trade in the Greater Mekong Sub-region," Foreign Trade Review, , vol. 51(2), pages 147-161, May.
    2. Hayakawa, Kazunobu & Tsubota, Kenmei, 2014. "Location choice in low-income countries: Evidence from Japanese investments in East Asia," Journal of Asian Economics, Elsevier, vol. 33(C), pages 30-43.
    3. Innwon Park & Soonchan Park, 2015. "Modes of Foreign Direct Investment and Patterns of Trade: An Alternative Empirical Approach," The World Economy, Wiley Blackwell, vol. 38(8), pages 1225-1245, August.
    4. Cho, Sungtaek & Kwak, Do Won & Lee, Hongshik, 2020. "Participation in the Kaesong Industrial Complex and its impact on productivity: South Korean textile firms’ experiences," Japan and the World Economy, Elsevier, vol. 53(C).
    5. Ivan DESEATNICOV & Konstantin KUCHERYAVYY, 2018. "Role of Past Experience and Intra-firm Trade in FDI Decisions," Discussion papers 18051, Research Institute of Economy, Trade and Industry (RIETI).
    6. Fukunari Kimura & Ayako Obashi, 2016. "Production Networks in East Asia: What We Know So Far," ADB Institute Series on Development Economics, in: Ganeshan Wignaraja (ed.), Production Networks and Enterprises in East Asia, edition 1, chapter 0, pages 33-64, Springer.
    7. Park, Innwon & Park, Soonchan, 2010. "Modes of foreign direct investment and patterns of trade: Why do multinational enterprises come To China?," MPRA Paper 26679, University Library of Munich, Germany.
    8. Kazunobu Hayakawa & Toshiyuki Matsuura, 2010. "Complex FDI in Japanese Multinationals," Chapters, in: Daisuke Hiratsuka & Yoko Uchida (ed.), Input Trade and Production Networks in East Asia, chapter 6, Edward Elgar Publishing.
    9. Leonard Lam, Fong Litt & Law, Siong Hook & Azman-Saini, W. N. W. & Khair-Afham, M. S. M. & Goh, Lim Thye, 2022. "High Technology Trade, Innovation and Economic Growth: Evidence from Aggregate and Disaggregate Trade Products," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 15-31.
    10. Ivan Deseatnicov & Konstantin Kucheryavyy & Kyoji Fukao, . "Exports, trade costs and FDI entry: evidence from Japanese firms," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    11. Hong Hiep Hoang & Cong Minh Huynh & Nguyen Minh Huy Duong & Ngoc Hoe Chau, 2022. "Determinants of foreign direct investment in Southern Central Coast of Vietnam: a spatial econometric analysis," Economic Change and Restructuring, Springer, vol. 55(1), pages 285-310, February.
    12. Ivan DESEATNICOV & Konstantin KUCHERYAVYY, 2017. "Exports and FDI Entry Decision: Evidence from Japanese foreign-affiliated firms," Discussion papers 17036, Research Institute of Economy, Trade and Industry (RIETI).
    13. Adolfo Maza & Paula Gutiérrez‐Portilla & José Villaverde, 2020. "On the drivers of UK direct investment in the Spanish regions: A spatial Durbin approach," Growth and Change, Wiley Blackwell, vol. 51(2), pages 646-675, June.
    14. Hiroyuki Nishiyama & Azusa Fujimori & Takahiro Sato, 2022. "Regional disparities, firm heterogeneity, and the activity of Japanese manufacturing multinationals in India," Pacific Economic Review, Wiley Blackwell, vol. 27(5), pages 462-488, December.
    15. Abderrazek Ben Hamouda, 2023. "On the Link Between FDI, Political Risk and Economic Growth in Sub-Saharan Africa: A Panel VAR Approach," Journal of Economic Impact, Science Impact Publishers, vol. 5(2), pages 171-180.
    16. Hiroyuki Nishiyama & Azusa Fujimori & Takahiro Sato, 2019. "Firm Heterogeneity and the Activity of Japanese Manufacturing Multinationals in India," Discussion Paper Series DP2019-06, Research Institute for Economics & Business Administration, Kobe University.
    17. Chen, Cheng & Sun, Chang & Zhang, Hongyong, 2022. "Learning and information transmission within multinational corporations," European Economic Review, Elsevier, vol. 143(C).
    18. Hiratsuka, Daisuke, 2011. "Production networks in the Asia-Pacific region : facts and policy implications," IDE Discussion Papers 315, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Fukunari Kimura & Mari Pangestu & Shandre M. Thangavelu & Christopher Findlay (ed.), 2021. "Handbook on East Asian Economic Integration," Books, Edward Elgar Publishing, number 18644, August.
    20. Koji ITO, 2011. "FDI in Emerging Economies: An analysis in a firm heterogeneity model," Discussion papers 11055, Research Institute of Economy, Trade and Industry (RIETI).
    21. Kazunobu HAYAKAWA & Toshiyuki MATSUURA, 2013. "Heterogeneous Impact of Trade Liberalization on Vertical FDI: Evidence from Japanese firm-level data," Discussion papers 13020, Research Institute of Economy, Trade and Industry (RIETI).
    22. Im, Hyejoon, 2016. "The effects of regional trade agreements on FDI by its origin and type: Evidence from U.S. multinational enterprises activities," Japan and the World Economy, Elsevier, vol. 39(C), pages 1-11.
    23. Maciej Gawrysiak & Aleksandra Mazur-Pietrzak & Sebastian Stępień, 2019. "The Dynamics And Determinants Of Foreign Direct Investment In Selected Asean Countries," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(21), pages 1-3.

    More about this item

    JEL classification:

    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:2010-008. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Global COE Program Office (email available below). General contact details of provider: https://edirc.repec.org/data/iekeijp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.