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

Nobuaki Yamashita, Toshiyuki Matsuura and Kentaro Nakajima

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

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 (search for similar items in EconPapers)
JEL-codes: F23 L22 R3 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014
New Economics Papers: this item is included in nep-cse, nep-dcm, nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China (2014)
Working Paper: Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China (2014)
Working Paper: Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China (2013)
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