IDEAS home Printed from
   My bibliography  Save this paper

The Location and Characteristics of U.S. Affiliates in Asia


  • Robert E. Lipsey


Market size and growth rates, per capita income, distance from the United States, and tax rates on U.S. affiliates accounted for about half the variation among developing host countries in most aspects of U.S. FDI activity. Residuals from the equations for one period add greatly to the explanatory power of the next period's equations, suggesting that there are long-run characteristics of the host economies, omitted from the equations, that are favorable or unfavorable to U.S. investment and FDI activity. There are considerable differences in the determinants of U.S. FDI activity between industries in which U.S. affiliates are export-oriented, such as machinery, and industries in which the affiliates' sales are mainly local. In the export-oriented industries, market size and distance from the United States were unimportant, and high per capita real income was the most consistent favorable influence. In the industries oriented to local sales, large market size attracted U.S. firms and long distance from the United States discouraged them. Among the ten Asian countries studied, Singapore and Malaysia had the largest U.S. affiliate shares of aggregate output while India, China, and Korea had the smallest. The countries with the largest shares were also those that ranked high on measures of institutional characteristics, including low levels of corruption. Measured by deviations from the equations, however, the relation to the institutional measures was blurred, suggesting that the institutional measures are correlated with the economic characteristics used as explanatory variables in the equations.

Suggested Citation

  • Robert E. Lipsey, 1999. "The Location and Characteristics of U.S. Affiliates in Asia," NBER Working Papers 6876, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6876
    Note: ITI

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    2. Kravis, Irving B. & Lipsey, Robert E., 1982. "The location of overseas production and production for export by U.S. multinational firms," Journal of International Economics, Elsevier, vol. 12(3-4), pages 201-223, May.
    3. Robert E. Lipsey & Merle Yahr Weiss, 1974. "The Structure of Ocean Transport Charges," NBER Chapters,in: Explorations in Economic Research, Volume 1, Number 1, pages 162-193 National Bureau of Economic Research, Inc.
    4. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    5. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • 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:


    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:nbr:nberwo:6876. 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: () or (Joanne Lustig). 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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.