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Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy

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  • Kuchiki, Akifumi

Abstract

This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.

Suggested Citation

  • Kuchiki, Akifumi, 2005. "Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy," IDE Discussion Papers 33, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper33
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=38132&item_no=1&attribute_id=22&file_no=1
    File Function: First version, 2005
    Download Restriction: no
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    Cited by:

    1. Taguchi, Hiroyuki, 2018. "The involvement in global value chains and its policy implication in Vietnam," MPRA Paper 84367, University Library of Munich, Germany.

    More about this item

    Keywords

    Flowchart approach; Industrial cluster policy; Capacity building; Institutions; Exchange rate; Country risk; Corporate tax rate; Foreign investments; Industrial policy; Econometric model; International business enterprises; Asia; East Asia; Southeast Asia; 国際投資; 産業政策; 経済モデル; 世界企業; 多国籍企業; アジア; 東アジア; 東南アジア;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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