Industrial groupings and foreign direct investment

Bruce A. Blonigen (), Christopher J. Ellis () and Dietrich Fausten ()
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Bruce A. Blonigen: Department of Economics, University of Oregon and NBER
Christopher J. Ellis: Department of Economics, University of Oregon
Dietrich Fausten: Department of Economics, Monash University

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: We explore worldwide foreign direct investment location decisions by Japanese manufacturing firms from 1985 through 1991. Our conditional logit estimates provide evidence that firms’ location decisions are affected by membership in either vertical or horizontal keiretsu. Consistent with previous studies that stress agglomeration effects on firms’ location decisions, we find that the stock of investment in a region by a firm’s vertical keiretsu partners increases the probability of location. Further, we find that the recent flow of investment into a region by a firm’s horizontal keiretsu partners increases the probability of investment to the region, providing evidence of networking effects.

JEL-codes: F23 G3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ifn and nep-mic
Date: 2003-03-01
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