How Does FDI Affect Productivity at Home? Evidence from a Plant-Level Analysis

Kazunobu Hayakawa, Toshiyuki Matsuura, Kazuyuki Motohashi

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


This study investigates the effect of foreign direct investments (FDI) on home productivity using plant-level data rather than firm-level data. Our results are consistent with the theoretical predictions. Horizontal FDI (HFDI) does not have a significantly positive effect on home productivity in plants that have the same activities abroad. In contrast, vertical FDI (VFDI) significantly enhances productivity in plants with an input–output relationship with activities relocated abroad. Furthermore, focusing on FDI in East Asia, the productivity improvements at home through VFDI are even greater, which might be caused by significant differences in factor prices between Japan and host countries.

Original languageEnglish
Pages (from-to)403-422
Number of pages20
JournalJournal of Industry, Competition and Trade
Issue number4
Publication statusPublished - 2016 Dec 1


  • FDI
  • Japan
  • Productivity
  • System GMM

ASJC Scopus subject areas

  • Industrial relations


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