Impact of Extensive and Intensive Margins of Foreign Direct Investment on Domestic Corporate Performance: Evidence from Japanese Automobile Parts Suppliers

Research output: Contribution to journalReview article

Abstract

This study uses firm-level data on Japanese automobile parts suppliers to investigate the impact of foreign direct investment (FDI) on domestic corporate performance. We use the automobile makers' FDI as an instrumental variable for suppliers' FDI and estimate the impact of both the extensive and intensive margins of FDI. We find that whereas the intensive margin of FDI does not significantly impact corporate performance, the extensive margin positively influences sales and total factor productivity. Furthermore, the impact of the initial FDI entry brings stronger effects than that of subsequent FDI flows.

Original languageEnglish
Pages (from-to)187-209
Number of pages23
JournalAsian Economic Papers
Volume16
Issue number2
DOIs
Publication statusPublished - 2017 Jun 1

Fingerprint

direct investment
foreign investment
supplier
motor vehicle
performance
evidence
Extensive margin
Suppliers
Intensive margin
Corporate performance
Foreign direct investment
Automobile
sales
productivity
firm

ASJC Scopus subject areas

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

Cite this

@article{8e5d2f9510c142d3859a1a51506bcc84,
title = "Impact of Extensive and Intensive Margins of Foreign Direct Investment on Domestic Corporate Performance: Evidence from Japanese Automobile Parts Suppliers",
abstract = "This study uses firm-level data on Japanese automobile parts suppliers to investigate the impact of foreign direct investment (FDI) on domestic corporate performance. We use the automobile makers' FDI as an instrumental variable for suppliers' FDI and estimate the impact of both the extensive and intensive margins of FDI. We find that whereas the intensive margin of FDI does not significantly impact corporate performance, the extensive margin positively influences sales and total factor productivity. Furthermore, the impact of the initial FDI entry brings stronger effects than that of subsequent FDI flows.",
author = "Toshiyuki Matsuura",
year = "2017",
month = "6",
day = "1",
doi = "10.1162/ASEP_a_00535",
language = "English",
volume = "16",
pages = "187--209",
journal = "Asian Economic Papers",
issn = "1535-3516",
publisher = "MIT Press Journals",
number = "2",

}

TY - JOUR

T1 - Impact of Extensive and Intensive Margins of Foreign Direct Investment on Domestic Corporate Performance

T2 - Evidence from Japanese Automobile Parts Suppliers

AU - Matsuura, Toshiyuki

PY - 2017/6/1

Y1 - 2017/6/1

N2 - This study uses firm-level data on Japanese automobile parts suppliers to investigate the impact of foreign direct investment (FDI) on domestic corporate performance. We use the automobile makers' FDI as an instrumental variable for suppliers' FDI and estimate the impact of both the extensive and intensive margins of FDI. We find that whereas the intensive margin of FDI does not significantly impact corporate performance, the extensive margin positively influences sales and total factor productivity. Furthermore, the impact of the initial FDI entry brings stronger effects than that of subsequent FDI flows.

AB - This study uses firm-level data on Japanese automobile parts suppliers to investigate the impact of foreign direct investment (FDI) on domestic corporate performance. We use the automobile makers' FDI as an instrumental variable for suppliers' FDI and estimate the impact of both the extensive and intensive margins of FDI. We find that whereas the intensive margin of FDI does not significantly impact corporate performance, the extensive margin positively influences sales and total factor productivity. Furthermore, the impact of the initial FDI entry brings stronger effects than that of subsequent FDI flows.

UR - http://www.scopus.com/inward/record.url?scp=85020132426&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85020132426&partnerID=8YFLogxK

U2 - 10.1162/ASEP_a_00535

DO - 10.1162/ASEP_a_00535

M3 - Review article

AN - SCOPUS:85020132426

VL - 16

SP - 187

EP - 209

JO - Asian Economic Papers

JF - Asian Economic Papers

SN - 1535-3516

IS - 2

ER -