The Resilience of FDI to Natural Disasters Through Industrial Linkages

Hayato Kato, Toshihiro Okubo

Research output: Contribution to journalArticlepeer-review

Abstract

When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which foreign multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediate inputs, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide a number of extensions of the basic model to incorporate, for example, multinationals with heterogeneous productivity and disaster reconstruction.

Original languageEnglish
Pages (from-to)177-225
Number of pages49
JournalEnvironmental and Resource Economics
Volume82
Issue number1
DOIs
Publication statusPublished - 2022 May

Keywords

  • Foreign direct investment (FDI)
  • Input–output linkages
  • Multinational enterprises (MNEs)
  • Multiple equilibria
  • Supply chain disruptions

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Fingerprint

Dive into the research topics of 'The Resilience of FDI to Natural Disasters Through Industrial Linkages'. Together they form a unique fingerprint.

Cite this