Complex Vertical FDI and Firm Heterogeneity: Evidence from East Asia

Kazunobu Hayakawa and Toshiyuki Matsuura

No 2010-008, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: In this study, we statistically test the validity of the mechanics of complex vertical foreign direct investment (VFDI) in Japanese machinery FDI to East Asia by estimating a multiple-spatial lag model. From the theoretical viewpoint, in complex VFDI, the production activity of affiliates in a given country is positively related to that in neighboring countries that have large differences in factor prices with the given country. Our empirical results show that such mechanics of complex VFDI work in Japanese FDI to East Asia, and that they work more strongly in those MNEs with higher productivity. These results have important implications on the policies of developing countries in attracting FDI.

Pages: 34 pages
Date: 2010
New Economics Papers: this item is included in nep-ifn, nep-int and nep-sea
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Citations: View citations in EconPapers (4)

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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 (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:kei:dpaper:2010-008

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