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Firm Heterogeneity and the Structure of Export and FDI:Evidence from Japanese Manufacturing Industries

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  • Ayumu Tanaka

Abstract

The percentage of exporters and multinational enterprises (MNEs) varies substantially across industries. We extend the firm heterogeneity model presented in Helpman et al. (2004) to derive testable predictions about the prevalence of these internationalized modes. The model indicates that intra-industry firm heterogeneity and R&D intensity play large roles in the inter-industry variation of the number of internationalized firms. We investigate whether these factors as well as import tariff affect the structure of export and foreign direct investment (FDI) using Japanese industry-level data. We obtain results that are consistent with the model. First, industries with larger productivity dispersion have a larger percentage of non-MNE exporters, a larger percentage of MNEs, and a larger percentage of the sum of exporters and MNEs. Second, MNEs are heavily concentrated in R&D intensive industries. In addition, we reveal that lower import tariffs raise the percentage of exporters and MNEs in line with Melitz (2003).

Suggested Citation

  • Ayumu Tanaka, 2010. "Firm Heterogeneity and the Structure of Export and FDI:Evidence from Japanese Manufacturing Industries," Discussion papers e-09-003, Graduate School of Economics Project Center, Kyoto University.
  • Handle: RePEc:kue:dpaper:e-09-003
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    References listed on IDEAS

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    1. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    2. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
    3. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    4. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    5. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 31-66.
    6. Head, Keith & Ries, John, 2003. "Heterogeneity and the FDI versus export decision of Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 448-467, December.
    7. WAKASUGI Ryuhei & TODO Yasuyuki & SATO Hitoshi & NISHIOKA Shuichiro & MATSUURA Toshiyuki & ITO Banri & TANAKA Ayumu, 2008. "The Internationalization of Japanese Firms: New Findings Based on Firm-Level Data," Discussion papers 08036, Research Institute of Economy, Trade and Industry (RIETI).
    8. Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 695-719, December.
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    More about this item

    Keywords

    Firm heterogeneity; Multinationals; Exports; Foreign direct investment;

    JEL classification:

    • F1 - International Economics - - Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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