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Affiliate Activity in Japanese and U.S. Multinationals and Japanese Exports, 1986-1995

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  • Robert E. Lipsey
  • Eric D. Ramstetter

Abstract

This study examines the relationship between Japan's manufactured exports to individual markets and the economic activities of foreign manufacturing affiliates of Japanese multinational corporations (MNCs) and U.S. MNCs in those markets. First, the relationships between Japanese export levels and employment in foreign affiliates of Japanese MNCs are analyzed in the context of a typical gravity model explaining the cross-country variation of Japan's manufacturing exports. Second, the paper examines the effects of the presence of affiliates of U.S. MNCs on Japanese export levels. And third, it analyzes the relation of changes in Japanese exports to levels of and changes in employment in Japanese and U.S. MNC affiliates. The level of Japan's manufactured exports to a country is almost always positively related to employment in foreign manufacturing affiliates of Japanese MNCs there. There is no evidence that Japanese-owned host country production replaces Japanese exports. However, production by U.S. MNC affiliates in a country often tends to reduce Japanese exports to that market. In some industries and periods, the initial level of Japanese affiliate employment, or changes in Japanese affiliate employment, are positively and significantly correlated with changes in Japan's exports, and there are no cases of significant negative relationships. The predominant effect of U.S. affiliates' presence on changes in Japanese exports to a country is negative, but the evidence for that effect is not strong.

Suggested Citation

  • Robert E. Lipsey & Eric D. Ramstetter, 2001. "Affiliate Activity in Japanese and U.S. Multinationals and Japanese Exports, 1986-1995," NBER Working Papers 8581, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8581
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    References listed on IDEAS

    as
    1. Robert E. Lipsey & Eric D. Ramstetter & Magnus Blomstrom, 2000. "Outward FDI and Parent Exports and Employment: Japan, the United States, and Sweden," NBER Working Papers 7623, National Bureau of Economic Research, Inc.
    2. Magnus Blomstrom & Robert E. Lipsey & Ksenia Kulchycky, 1988. "U.S. and Swedish Direct Investment and Exports," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 257-302, National Bureau of Economic Research, Inc.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Lipsey, Robert E & Weiss, Merle Yahr, 1981. "Foreign Production and Exports in Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 488-494, November.
    5. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank.
    6. Robert E. Baldwin, 1988. "Trade Policy Issues and Empirical Analysis," NBER Books, National Bureau of Economic Research, Inc, number bald88-2.
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    Cited by:

    1. Ignacio Mauleón & Raul Larrion, 2003. "Growth and the current account: Malaysia and Singapore," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(2), pages 140-151, May.

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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