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Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity

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  • Tadashi Ito

    (Faculty of International Social Sciences Gakushuin University)

  • Toshiyuki Matsuura

    (Keio Economic Observatory Keio University)

  • Chih-Hai Yang

    (Department of Economics National Central University)

Abstract

This study revisits the nexus between foreign direct investment (FDI) and international trade in the dynamic perspective, focusing on intermediate goods imports of affiliates of Japanese firms operating in China. To examine the effect of the formation of the agglomeration and the recent FDI made by small firms, both of which have been overlooked in the literature, we construct a unique parent-affiliate matched panel data set of trade in intermediate goods, and estimate a discrete-time hazard model over the 2000–06 period. We found that affiliates owned by firms in agglomerated regions in Japan have a shorter duration of trade in intermediate goods compared with affiliates owned by smaller Japanese firms.

Suggested Citation

  • Tadashi Ito & Toshiyuki Matsuura & Chih-Hai Yang, 2020. "Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity," Asian Economic Papers, MIT Press, vol. 19(3), pages 90-106, Fall.
    • Handle: RePEc:tpr:asiaec:v:19:y:2020:i:3:p:90-106
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    Cited by:

    1. Yang, Chih-Hai & Matsuura, Toshiyuki & Ito, Tadashi, 2019. "R&D and patenting activities of foreign firms in China: The case of Japan," Japan and the World Economy, Elsevier, vol. 49(C), pages 151-160.
    2. Toshiyuki Matsuura, 2022. "Heterogeneous impact of import competition on firm organisation: Evidence from Japanese firm‐level data," The World Economy, Wiley Blackwell, vol. 45(7), pages 2251-2269, July.

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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