TY - JOUR
T1 - The Resilience of FDI to Natural Disasters Through Industrial Linkages
AU - Kato, Hayato
AU - Okubo, Toshihiro
N1 - Funding Information:
This is a substantially revised version of our earlier working paper (Kato and Okubo ). It is conducted as a part of the Project “Economic Policy Issues in the Global Economy” undertaken at the Research Institute of Economy, Trade and Industry (RIETI). We wish to thank Akira Sasahara for extensive discussions and conference/seminar participants at RIETI, Hosei U, Osaka U, Kobe U and EWMES2021 for useful comments. Financial support from the the Japan Society for the Promotion of Science (Grant Numbers: JP19K13693; JP99K13693; JP20H01495) are gratefully acknowledged. All remaining errors are our sole responsibility.
Funding Information:
This is a substantially revised version of our earlier working paper (Kato and Okubo 2017 ). It is conducted as a part of the Project “Economic Policy Issues in the Global Economy” undertaken at the Research Institute of Economy, Trade and Industry (RIETI). We wish to thank Akira Sasahara for extensive discussions and conference/seminar participants at RIETI, Hosei U, Osaka U, Kobe U and EWMES2021 for useful comments. Financial support from the the Japan Society for the Promotion of Science (Grant Numbers: JP19K13693; JP99K13693; JP20H01495) are gratefully acknowledged. All remaining errors are our sole responsibility.
Publisher Copyright:
© 2022, The Author(s).
PY - 2022/5
Y1 - 2022/5
N2 - 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.
AB - 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.
KW - Foreign direct investment (FDI)
KW - Input–output linkages
KW - Multinational enterprises (MNEs)
KW - Multiple equilibria
KW - Supply chain disruptions
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U2 - 10.1007/s10640-022-00666-1
DO - 10.1007/s10640-022-00666-1
M3 - Article
AN - SCOPUS:85127650572
SN - 0924-6460
VL - 82
SP - 177
EP - 225
JO - Environmental and Resource Economics
JF - Environmental and Resource Economics
IS - 1
ER -
