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Cross-border Vertical Integration and Intra-firm Trade: New Evidence from Korean and Japanese Firm-level Data

Author

Listed:
  • Hyunbae Chun

    (Department of Economics Sogang University)

  • Jung Hur

    (Department of Economics Sogang University)

  • Young Gak Kim

    (School of Economics Senshu University)

  • Hyeog Ug Kwon

    (College of Economics Nihon University)

Abstract

This paper establishes two facts about cross-border vertical integration and intra-firm trade of firms in Korean and Japanese manufacturing industries. First, the intra-firm trade between a parent firm and its affiliates is highly concentrated in a small number of large multinational corporations. Second, the input–output coefficient between the parent firm's industry and the affiliate's industry is weakly related to the presence and magnitude of intra-firm trade between the parent firm and its affiliates. Furthermore, these two characteristics are also found in domestic vertically integrated firms. In particular, the second point identifies a need for further research on the motivation of cross-border vertical integration between two manufacturers, the final good producers at home and the input suppliers abroad.

Suggested Citation

  • Hyunbae Chun & Jung Hur & Young Gak Kim & Hyeog Ug Kwon, 2017. "Cross-border Vertical Integration and Intra-firm Trade: New Evidence from Korean and Japanese Firm-level Data," Asian Economic Papers, MIT Press, vol. 16(2), pages 126-139, Summer.
    • Handle: RePEc:tpr:asiaec:v:16:y:2017:i:2:p:126-139
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    References listed on IDEAS

    as
    1. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
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    5. Mitsoyo Ando & Fukunari Kimura, 2015. "Globalization and Domestic Operations: Applying the JC/JD Method to Japanese Manufacturing Firms," Asian Economic Papers, MIT Press, vol. 14(2), pages 1-35, Summer.
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    Cited by:

    1. Hyunbae Chun & Jung Hur & Doyoung Kim & Nyeong Seon Son, 2020. "Cross‐Border Vertical Integration and Technology in Factory Asia: Evidence from Korea," The Developing Economies, Institute of Developing Economies, vol. 58(2), pages 99-133, June.
    2. Priyaranjan Jha & Jae Yoon Lee & Yang Liang & Devashish Mitra, 2021. "International trade and employment: Theory and evidence from Korean firms," The World Economy, Wiley Blackwell, vol. 44(11), pages 3351-3388, November.
    3. Milliou, Chrysovalantou, 2020. "Vertical integration without intrafirm trade," Economics Letters, Elsevier, vol. 192(C).
    4. Chrysovalantou Milliou & Joel Sandonis, 2020. "Vertical foreign direct investment: Make, buy, and sell," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 884-912, August.
    5. Ivan DESEATNICOV & Konstantin KUCHERYAVYY, 2017. "Exports and FDI Entry Decision: Evidence from Japanese foreign-affiliated firms," Discussion papers 17036, Research Institute of Economy, Trade and Industry (RIETI).
    6. Toshiyuki Matsuura & Banri Ito & Eiichi Tomiura, 2023. "Intrafirm trade, input–output linkage, and contractual frictions: evidence from Japanese affiliate-level data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(1), pages 133-152, February.
    7. Hyunbae Chun & Jung Hur & Nyeong Seon Son & Haeyeon Yoon, 2019. "Do Non‐exporting Plants Benefit from Exporting Peer Plants?," Asian Economic Journal, East Asian Economic Association, vol. 33(3), pages 221-234, September.

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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G00 - Financial Economics - - General - - - General

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