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The Resilience of FDI to Natural Disasters through Industrial Linkages

Hayato Kato and Toshihiro Okubo ()

No 21-06, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which 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 intermediates, 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 two extensions of the basic model to allow for 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 R11 (search for similar items in EconPapers)
Pages: 55pages
Date: 2021-06
New Economics Papers: this item is included in nep-geo
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http://www2.econ.osaka-u.ac.jp/econ_society/dp/2106.pdf (application/pdf)

Related works:
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021) Downloads
Working Paper: The Resilience of FDI to Natural Disasters through Industrial Linkages (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:2106

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