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Firm-Level Relationship between Technological Capability and Foreign Direct Investment

Author

Listed:
  • Eiichi Tomiura

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper reexamines the relationship between FDI and R&D by exploiting firm-level data for 118,300 Japanese manufacturers with no threshold. Our study confirms that the positive association between FDI and R&D is robust even if firms undertaking no FDI and/or no R&D are included. The inclusion of such firms, however, substantially attenuates the relationship. Higher technological capability is positively related with more extensive FDI, especially FDI in industrial countries by firms that have invested in Asia. Firms rich in human skills tend to prefer majority ownership in FDI, as predicted by the internalization FDI theory.

Suggested Citation

  • Eiichi Tomiura, 2003. "Firm-Level Relationship between Technological Capability and Foreign Direct Investment," Discussion Paper Series 138, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:138
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp138.pdf
    File Function: First version, 2003
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    Cited by:

    1. Sasidharan, Subash & Kathuria, Vinish, 2011. "Foreign Direct Investment and R&D: Substitutes or Complements--A Case of Indian Manufacturing after 1991 Reforms," World Development, Elsevier, vol. 39(7), pages 1226-1239, July.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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