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Endogenous FDI Spillovers from Japan to Russia and China with Spillover-Prevention Costs

Kiyoshi Matsubara ()

ERSA conference papers from European Regional Science Association

Abstract: This paper explores the role of FDI-spillover prevention costs in the strategic choice for a MNE of a developed country such as Japan about whether it perform FDI to an emerging economy such as Russia and China and about a degree of FDI spillovers that it allows. After discussing the exogenous spillover case in a duopoly model, this paper shows that with a quadratic prevention cost function, the MNE may choose a positive level of spillovers lower than the benchmark exogenous level, and also shows how endogenizing spillovers affect the home firm's decision on plant location. In the m-FDI-host-country firm case, the effects of the number of FDI-host country firms on the level of spillovers and the cutoff value of trade cost are not always monotonic.

Keywords: FDI; Endogenous Spillovers; Spillover-prevention Costs (search for similar items in EconPapers)
JEL-codes: F12 F23 O33 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-cis, nep-cna, nep-int and nep-tra
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