Productivity Spillovers and the Entry of Foreign-Owned Firms: The Case of Japanese Manufacturing Firms

Yukako Murakami and Kyoji Fukao

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper shows that in the short run an increase in foreign firms' industry share lowers the TFP growth of Japanese firms as a result of the decrease in market power. However, in the long run, the entry of foreign-owned firms has a positive effect on the productivity of local firms as a result of technology spillovers. In addition, the results suggest that foreign firms exert competitive pressure that forces Japanese firms with a high level of technological capabilities raise their productivity growth.

Keywords: Technology Spillovers; Market Power; FDI; Productivity; Absorptive Capacity (search for similar items in EconPapers)
JEL-codes: F11 (search for similar items in EconPapers)
Date: 2006-11
New Economics Papers: this item is included in nep-com, nep-eff and nep-sea
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Citations: View citations in EconPapers (1)

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