Complex vertical FDI and firm heterogeneity: Evidence from East Asia

Kazunobu Hayakawa, Toshiyuki Matsuura

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

This study statistically tests the validity of the mechanics of complex vertical foreign direct investment (C-VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From a theoretical perspective regarding C-VFDI, the production activity of affiliates in a given country is positively related to the production activity in neighboring countries that have large differences in factor prices with the given country. Furthermore, high-productivity firms are likely to choose a C-VFDI strategy. Our empirical results show no robust geographical relationship among affiliates' activities. However, the significantly positive relationship in wage differentials among those activities is found only for high-productivity firms.

Original languageEnglish
Pages (from-to)273-289
Number of pages17
JournalJournal of the Japanese and International Economies
Volume25
Issue number3
DOIs
Publication statusPublished - 2011 Sep

Fingerprint

direct investment
foreign investment
firm
evidence
productivity
wage difference
neighboring countries
mechanic
East Asia
Firm heterogeneity
Foreign direct investment
Firm productivity

Keywords

  • Complex VFDI
  • Spatial lag model
  • Third-country effects

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Complex vertical FDI and firm heterogeneity : Evidence from East Asia. / Hayakawa, Kazunobu; Matsuura, Toshiyuki.

In: Journal of the Japanese and International Economies, Vol. 25, No. 3, 09.2011, p. 273-289.

Research output: Contribution to journalArticle

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