Complex vertical FDI and firm heterogeneity: Evidence from East Asia

Kazunobu Hayakawa and Toshiyuki Matsuura

Journal of the Japanese and International Economies, 2011, vol. 25, issue 3, 273-289

Abstract: This study statistically tests the validity of the mechanics of complex vertical foreign direct investment (C-VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From a theoretical perspective regarding C-VFDI, the production activity of affiliates in a given country is positively related to the production activity in neighboring countries that have large differences in factor prices with the given country. Furthermore, high-productivity firms are likely to choose a C-VFDI strategy. Our empirical results show no robust geographical relationship among affiliates' activities. However, the significantly positive relationship in wage differentials among those activities is found only for high-productivity firms.

Keywords: Third-country; effects; Complex; VFDI; Spatial; lag; model (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia (2010)
Working Paper: Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:25:y:2011:i:3:p:273-289

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