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Global Production Sharing and the FDI Trade Nexus: New Evidence from the Japanese Automobile Industry

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  • Shuhei Nishitateno

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Abstract

The growing importance of global production sharing makes the nexus between outward foreign direct investment (FDI) and trade in parts and components ever more important. This paper examines the impact of overseas operation of upstream firms (parts and components suppliers) on parts and components exports from the home country through a case study of the Japanese automobile industry. The empirical analysis is based on a newly-constructed product-level dataset covering 32 products and 49 host countries over the period 1993 to 2008. It is found that overseas operation of upstream firm lead to additional exports of intermediate goods from the home country. This finding runs counter to the the popular view that the growing overseas activity of multinational enterprises could replace intermediate exports from a home country, thereby depriving the home country of job opportunities.

Suggested Citation

  • Shuhei Nishitateno, 2012. "Global Production Sharing and the FDI Trade Nexus: New Evidence from the Japanese Automobile Industry," Departmental Working Papers 2012-13, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2012-13
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mitsuo Inada & Yung-Hsing Guo, 2016. "Heterogeneous Impacts of a Change in Chinese FDI Regulations on Domestic Market Outcomes: Empirical Evidence from Taiwanese Plant Data," KIER Working Papers 934, Kyoto University, Institute of Economic Research.
    2. Shuhei Nishitateno, 2015. "Network Effects on Trade in Intermediate Goods: Evidence from the Automobile Industry," The Japanese Economic Review, Japanese Economic Association, vol. 66(3), pages 354-370, September.
    3. Selover, David D. & Yagihashi, Takeshi, 2015. "Examining industrial interdependence between Japan and South Korea: A FAVAR approach," Japan and the World Economy, Elsevier, vol. 36(C), pages 67-87.
    4. repec:tpr:asiaec:v:16:y:2017:i:2:p:187-209 is not listed on IDEAS
    5. NISHITATENO Shuhei, 2015. "Market Structure and Entry: Evidence from the intermediate goods market," Discussion papers 15081, Research Institute of Economy, Trade and Industry (RIETI).
    6. Lee, Hyun-Hoon & Park, Cyn-Young & Byun, Hyung-suk, 2013. "Do contagion effects exist in capital flow volatility?," Journal of the Japanese and International Economies, Elsevier, vol. 30(C), pages 76-95.
    7. ITO Keiko & TANAKA Ayumu, 2014. "The Impact of Multinationals' Overseas Expansion on Employment at Suppliers at Home: New evidence from firm-level transaction relationship data for Japan," Discussion papers 14011, Research Institute of Economy, Trade and Industry (RIETI).
    8. Chin Hee Hahn & Yong-Seok Choi & Sadayuki Takii & Dionisius Narjoko & Rafaelita M. Aldaba & Shandre M. Thangavelu & Archanun Kohpaiboon & Juthathip Jongwanich & Alfons Palangkaraya & Cassey Lee & Keik, . "Impact of Globalization on Labor Market," Books, Economic Research Institute for ASEAN and East Asia (ERIA), number 2012-rpr-04 edited by Chine Hee HAHN & Dionisius Narjoko.
    9. Keiko Ito & Ayumu Tanaka, . "Expansion of Overeas Production and the Impact on Employment in Domestic Supporting Industries: An Empirical Analysis Based on Buyer-Supplier Transaction Relationships," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).

    More about this item

    Keywords

    Global production sharing; foreign direct investment; exports; automobile; Japan;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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