Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia

Kazunobu Hayakawa and Toshiyuki Matsuura

No 211, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: In this paper we statistically test the validity of the mechanics of complex VFDI in Japanesemachinery FDI to East Asia; we do this by estimating a multiple-spatial lag model. From thetheoretical point of view, in complex VFDI, the production activity of affiliates in a given countryis positively related to that in neighboring countries which have large differences in factor priceswith the given country. Our empirical results show that such mechanics of complex VFDI workin Japanese FDI to East Asia, and that they work more strongly in the MNEs with higherproductivity. These results have an important implication for the policies of developing countriesin attracting FDI.

Keywords: Third-country Effects; Complex VFDI; Spatial Lag Model; East Asia; Foreign Investments (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2009-08-01
New Economics Papers: this item is included in nep-dev, nep-int and nep-sea
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Citations: View citations in EconPapers (8)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 211. 2009-08-01

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https://ir.ide.go.jp/record/37958/files/IDP000211_001.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Complex vertical FDI and firm heterogeneity: Evidence from East Asia (2011)
Working Paper: Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia (2010)
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