Technological Capability and FDI in Asia: Firm‐level Relationships among Japanese Manufacturers

Eiichi Tomiura

Asian Economic Journal, 2005, vol. 19, issue 3, 273-289

Abstract: The present paper reexamines the relationship between technological capabilities and FDI decisions at the firm level. The data cover 118 300 Japanese firms in all manufacturing industries. The R&D of Japanese firms has a noticeably weaker relationship with FDI in Asia than with FDI in industrial countries. This finding is confirmed to be robust even when alternative estimation techniques are used and when R&D expenditure data are replaced by patent data. The estimation results also reveal non‐negligible fixed entry costs for FDI, a finding consistent with the observation that only approximately 2 percent of the firms invest abroad.

Date: 2005
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https://doi.org/10.1111/j.1467-8381.2005.00213.x

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