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Networked FDI and third-country intra-firm trade

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  • Okubo, Toshihiro
  • Watabe, Yuta

Abstract

Foreign direct investment (FDI) is networked. This is beyond vertical and horizontal FDIs. Affiliates locate across multiple countries and trade among them. This paper investigates the FDI networks, using the Japanese foreign affiliate data. First, we investigate location patterns and industry patterns of foreign affiliates and find the network structure of FDI. Then, third-country intra-firm trade is explored. The third-country sales and sourcing within the firm boundary (third-country intra-firm trade) is active, but only large firms tend to construct production networks and engage third-country intra-firm trade. Firm size (size of parent and affiliates and the number of affiliates) is crucial in understanding third-country intra-firm trade.

Suggested Citation

  • Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    • Handle: RePEc:eee:reveco:v:83:y:2023:i:c:p:591-606
    DOI: 10.1016/j.iref.2022.10.003
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    More about this item

    Keywords

    Multinational firms; Networked FDI; Intra-firm trade; Sales and sourcing; Third-country;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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