The Resilience of FDI to Natural Disasters Through Industrial Linkages

Hayato Kato and Toshihiro Okubo

Environmental & Resource Economics, 2022, vol. 82, issue 1, No 6, 177-225

Abstract: Abstract When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which foreign multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediate inputs, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide a number of extensions of the basic model to incorporate, for example, multinationals with heterogeneous productivity and disaster reconstruction.

Keywords: Foreign direct investment (FDI); Multinational enterprises (MNEs); Input–output linkages; Supply chain disruptions; Multiple equilibria (search for similar items in EconPapers)
JEL-codes: F12 F23 Q54 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2022)
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021)
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021)
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021)
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021)
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DOI: 10.1007/s10640-022-00666-1

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