Firm-Level Relationship between Technological Capability and Foreign Direct Investment

Eiichi Tomiura

No 138, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper reexamines the relationship between FDI and R&D by exploiting firm-level data for 118,300 Japanese manufacturers with no threshold. Our study confirms that the positive association between FDI and R&D is robust even if firms undertaking no FDI and/or no R&D are included. The inclusion of such firms, however, substantially attenuates the relationship. Higher technological capability is positively related with more extensive FDI, especially FDI in industrial countries by firms that have invested in Asia. Firms rich in human skills tend to prefer majority ownership in FDI, as predicted by the internalization FDI theory.

JEL-codes: F23 L22 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-07
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Citations: View citations in EconPapers (4)

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