Exports, FDI, and productivity: Dynamic evidence from Japanese firms

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Abstract

This paper examines the relationship between exports, foreign direct investment, and firm productivity. Using longitudinal panel data on Japanese firms, it is found that the most productive firms engage in exports and foreign direct investment, medium productive firms engage in either exports or foreign direct investment, and the least productive firms focus only on the domestic market. Moreover, exports and foreign direct investment appear to improve firm productivity once the productivity convergence effect is controlled for. Firms that retain a presence in foreign markets, either by exports or foreign direct investment, show the highest productivity growth, which contributes to improvements in national productivity.

Original languageEnglish
Pages (from-to)695-719
Number of pages25
JournalReview of World Economics
Volume142
Issue number4
DOIs
Publication statusPublished - 2006 Dec

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Keywords

  • Firm heterogeneity
  • Firm survival
  • Multinational enterprises
  • Panel data
  • Total factor productivity

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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