Globalization and domestic operations: Applying the JC/JD method to Japanese manufacturing firms

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Abstract

Does outward foreign direct investment accelerate de-industrialization at home or generate domestic jobs and operations? This paper applies the job creation (JC)/destruction (JD) method to micro data of Japanese manufacturing firms and provides a bird's eye view of the dynamism of globalizing firms in terms of domestic employment, domestic establishments, domestic affiliates, exports, and imports. It examines gross and net changes in domestic operations by multinational enterprises (MNEs) that expand operations abroad (expanding MNEs), compared with non-expanding MNEs and local firms, for the periods of 1998-2002, 2002-06, 2006-08, and 2008-10. It also conducts the Kolmogorov-Smirnov test to investigate whether the changes in domestic operations and trade by expanding MNEs are larger than those by other firm types. Major findings are the followin-g: (1) gross changes in domestic employment and domestic operations are much larger than net changes, showing restructuring dynamism and firm heterogeneity; (2) de-industrialization or the shrinkage of the manufacturing sector is not relevant except for the period 1998-2002, though a slight declining trend in manufacturing activities is observed in recent years; (3) expanding multinational small- and medium-sized enterprises (SMEs) tends to enlarge domestic employment and domestic operations, compared with other types of SMEs; (4) expanding MNEs intensify headquarters activities; and (5) expanding multinational SMEs are likely to expand exports and imports more than other types of SMEs.

Original languageEnglish
Pages (from-to)1-35
Number of pages35
JournalAsian Economic Papers
Volume14
Issue number2
DOIs
Publication statusPublished - 2015 Jun 12

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job creation
small and medium-sized enterprise
manufacturing
globalization
firm
de-industrialization
dynamism
import
manufacturing sector
direct investment
foreign investment
restructuring
Job creation
Globalization
Manufacturing firms
trend
Multinational enterprises

ASJC Scopus subject areas

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

Cite this

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title = "Globalization and domestic operations: Applying the JC/JD method to Japanese manufacturing firms",
abstract = "Does outward foreign direct investment accelerate de-industrialization at home or generate domestic jobs and operations? This paper applies the job creation (JC)/destruction (JD) method to micro data of Japanese manufacturing firms and provides a bird's eye view of the dynamism of globalizing firms in terms of domestic employment, domestic establishments, domestic affiliates, exports, and imports. It examines gross and net changes in domestic operations by multinational enterprises (MNEs) that expand operations abroad (expanding MNEs), compared with non-expanding MNEs and local firms, for the periods of 1998-2002, 2002-06, 2006-08, and 2008-10. It also conducts the Kolmogorov-Smirnov test to investigate whether the changes in domestic operations and trade by expanding MNEs are larger than those by other firm types. Major findings are the followin-g: (1) gross changes in domestic employment and domestic operations are much larger than net changes, showing restructuring dynamism and firm heterogeneity; (2) de-industrialization or the shrinkage of the manufacturing sector is not relevant except for the period 1998-2002, though a slight declining trend in manufacturing activities is observed in recent years; (3) expanding multinational small- and medium-sized enterprises (SMEs) tends to enlarge domestic employment and domestic operations, compared with other types of SMEs; (4) expanding MNEs intensify headquarters activities; and (5) expanding multinational SMEs are likely to expand exports and imports more than other types of SMEs.",
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