Overseas Investment and Firm Exports

Keith Head and John Ries ()

Review of International Economics, 2001, vol. 9, issue 1, 108-122

Abstract: A firm can serve overseas customers by exporting or by producing in the foreign market. Thus, ceteris paribus, one might expect increases in overseas investment to displace exports. However, most empirical work has found a positive relation between the two variables. The authors use a panel dataset containing 25 years’ of data on 932 Japanese manufacturing firms to investigate the effect direct investment abroad has on exports. For the full sample of firms, complementarity is found. The relationship, however, varies across firms. Those that are unlikely to ship intermediates to overseas production affiliates exhibit substitution.

Date: 2001
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