TY - JOUR
T1 - Complex vertical FDI and firm heterogeneity
T2 - Evidence from East Asia
AU - Hayakawa, Kazunobu
AU - Matsuura, Toshiyuki
N1 - Funding Information:
We thank the Ministry of Economy, Trade and Industry for providing the micro data used in this study. Toshiyuki Matsuura thanks the Nomura Academic Research Fund for its financial support. We thank the editor-in-chief, Takeo Hoshi, two anonymous referees, Jenny Corbett, Tomoyuki Furutani, Yoshihiro Hashiguchi, Yukiko Ito, Kazuhiko Kakamu, Fukunari Kimura, Hiroshi Mukunoki, Toshihiro Okubo, Eiichi Tomiura, and Ryuhei Wakasugi for their valuable comments and suggestions. Opinions expressed in this paper are the authors’ and do not reflect the views of our institutes.
PY - 2011/9
Y1 - 2011/9
N2 - This study statistically tests the validity of the mechanics of complex vertical foreign direct investment (C-VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From a theoretical perspective regarding C-VFDI, the production activity of affiliates in a given country is positively related to the production activity in neighboring countries that have large differences in factor prices with the given country. Furthermore, high-productivity firms are likely to choose a C-VFDI strategy. Our empirical results show no robust geographical relationship among affiliates' activities. However, the significantly positive relationship in wage differentials among those activities is found only for high-productivity firms.
AB - This study statistically tests the validity of the mechanics of complex vertical foreign direct investment (C-VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From a theoretical perspective regarding C-VFDI, the production activity of affiliates in a given country is positively related to the production activity in neighboring countries that have large differences in factor prices with the given country. Furthermore, high-productivity firms are likely to choose a C-VFDI strategy. Our empirical results show no robust geographical relationship among affiliates' activities. However, the significantly positive relationship in wage differentials among those activities is found only for high-productivity firms.
KW - Complex VFDI
KW - Spatial lag model
KW - Third-country effects
UR - http://www.scopus.com/inward/record.url?scp=80051873594&partnerID=8YFLogxK
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U2 - 10.1016/j.jjie.2011.06.004
DO - 10.1016/j.jjie.2011.06.004
M3 - Article
AN - SCOPUS:80051873594
SN - 0889-1583
VL - 25
SP - 273
EP - 289
JO - Journal of The Japanese and International Economies
JF - Journal of The Japanese and International Economies
IS - 3
ER -
