 Japanese FDI into U.S. service industries: Exchange rate changes and services tradabilityKasaundra M. Tomlin Japan and the World Economy, 2008, vol. 20, issue 4, 521-541 Abstract: Using the implications of the model of investment under uncertainty, this paper provides a systematic examination of the FDI-exchange rate relationship with respect to services taking into account the degree of tradability across services. Services have mainly been addressed in the literature as a sensitivity test by industry using aggregated service data identified as "nonmanufacturing". Using data on Japanese FDI into 207 U.S. service industries, maximium-likehood estimates reveal that dollar appreciations are positively correlated with service FDI flows into the U.S. This positive correlation is stronger for non-tradable services versus tradable services. For tradable and non-tradable producer services, higher exchange rate uncertainty may lead to fewer FDI occurrences. On average, across all types of services, higher U.S. unit labor costs relative to Japan had a deterrent effect on Japanese service FDI as well. Finally, this paper also provides a useful benchmark to partition services by tradability. Keywords: Foreign; direct; investment; Exchange; rates; Services (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:20:y:2008:i:4:p:521-541 Access Statistics for this article Japan and the World Economy is currently edited by Robert Dekle and Yasushi Hamao More articles in Japan and the World Economy from Elsevier |
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