Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China

Nobuaki Yamashita; Toshiyuki Matsuura; Kentaro Nakajima

doi:10.1016/j.jjie.2014.04.001

Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China

Nobuaki Yamashita
, Toshiyuki Matsuura
, Kentaro Nakajima

Keio Economic Observatory(KEO)

Research output: Contribution to journal › Article › peer-review

20 Citations (Scopus)

Abstract

This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995-2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.

Original language	English
Pages (from-to)	24-41
Number of pages	18
Journal	Journal of The Japanese and International Economies
Volume	34
DOIs	https://doi.org/10.1016/j.jjie.2014.04.001
Publication status	Published - 2014 Dec

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure

Keywords

Agglomeration
Backward and forward linkages
Location choice of multinational enterprises

ASJC Scopus subject areas

Finance
Economics and Econometrics
Political Science and International Relations

Access to Document

10.1016/j.jjie.2014.04.001

Cite this

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title = "Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China",

abstract = "This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995-2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.",

keywords = "Agglomeration, Backward and forward linkages, Location choice of multinational enterprises",

author = "Nobuaki Yamashita and Toshiyuki Matsuura and Kentaro Nakajima",

note = "Funding Information: We acknowledge the financial assistance from the Kikawada foundation in Tokyo, Japan as well as from the JSPS (\#25380275). We are also grateful to Takatoshi Tabuchi and Kyoji Fukao for their supports for the grant application. We would also like to thank a referee of JJIE for the prompt, constructive and very useful comments. The quality of the paper has significantly been enriched by incorporating the referee{\textquoteright}s suggestions. We are also grateful to Rene Belderbos, Noel Gaston, Kozo Kiyota, and the workshop attendees at University of Tokyo, Keio University, Tohoku University, Prefecture University of Kumamoto, Fukuoka University and the Japan Society of International Economics for their useful comments. ",

year = "2014",

month = dec,

doi = "10.1016/j.jjie.2014.04.001",

language = "English",

volume = "34",

pages = "24--41",

journal = "Journal of The Japanese and International Economies",

issn = "0889-1583",

publisher = "Academic Press Inc.",

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T1 - Agglomeration effects of inter-firm backward and forward linkages

T2 - Evidence from Japanese manufacturing investment in China

AU - Yamashita, Nobuaki

AU - Matsuura, Toshiyuki

AU - Nakajima, Kentaro

N1 - Funding Information: We acknowledge the financial assistance from the Kikawada foundation in Tokyo, Japan as well as from the JSPS (#25380275). We are also grateful to Takatoshi Tabuchi and Kyoji Fukao for their supports for the grant application. We would also like to thank a referee of JJIE for the prompt, constructive and very useful comments. The quality of the paper has significantly been enriched by incorporating the referee’s suggestions. We are also grateful to Rene Belderbos, Noel Gaston, Kozo Kiyota, and the workshop attendees at University of Tokyo, Keio University, Tohoku University, Prefecture University of Kumamoto, Fukuoka University and the Japan Society of International Economics for their useful comments.

PY - 2014/12

Y1 - 2014/12

N2 - This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995-2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.

AB - This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995-2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.

KW - Agglomeration

KW - Backward and forward linkages

KW - Location choice of multinational enterprises

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UR - https://www.scopus.com/pages/publications/84899807461#tab=citedBy

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DO - 10.1016/j.jjie.2014.04.001

M3 - Article

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SN - 0889-1583

VL - 34

SP - 24

EP - 41

JO - Journal of The Japanese and International Economies

JF - Journal of The Japanese and International Economies

ER -

Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

Access to Document

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