Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity*

Tadashi Ito (), Toshiyuki Matsuura and Chih-Hai Yang ()
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Tadashi Ito: Faculty of International Social Sciences Gakushuin University
Chih-Hai Yang: Department of Economics National Central University

Asian Economic Papers, 2020, vol. 19, issue 3, 90-106

Abstract: This study revisits the nexus between foreign direct investment (FDI) and international trade in the dynamic perspective, focusing on intermediate goods imports of affiliates of Japanese firms operating in China. To examine the effect of the formation of the agglomeration and the recent FDI made by small firms, both of which have been overlooked in the literature, we construct a unique parent-affiliate matched panel data set of trade in intermediate goods, and estimate a discrete-time hazard model over the 2000–06 period. We found that affiliates owned by firms in agglomerated regions in Japan have a shorter duration of trade in intermediate goods compared with affiliates owned by smaller Japanese firms.

Date: 2020
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Working Paper: Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods:Agglomeration Effects and Parent-firm Heterogeneity (2016)
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