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Identifier to cite or link to this item: https://hdl.handle.net/10086/17133

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Title
Vertical Foreign Direct Investment: Evidence from Japanese and U.S. Multinational Enterprises
Creator
Creator Name
Tanaka, Kiyoyasu Tanaka, Kiyoyasu
田中, 清泰 田中, 清泰
タナカ, キヨヤス タナカ, キヨヤス
Affiliation
Affiliation Name
Hitotsubashi University
Editor
Contributor Name
社会科学の高度統計・実証分析拠点構築 = Research Unit for Statistical and Empirical Analysis in Social Sciences
Key Word
Multinational firms
foreign direct investment
skill endowments
JEL
F21
F23
Abstract
Foreign direct investment (FDI) has rapidly increased in developing countries since the 1990s, but formal evidence for vertical FDI has been surprisingly mixed. This paper empirically reconsiders the factor-proportions hypothesis by exploring the role of host country's relative skill endowments in offshore production of multinational enterprises (MNEs). Using panel data on sales of foreign affiliates by Japanese and U.S. MNEs in the 1990s, I find that relative skill abundance has a large negative impact on Japanese affiliate sales, but little effects on U.S. affiliate sales. Robust to a wide variety of sensitivity checks, the results strongly support vertical FDI in the case of Japanese MNEs, but not U.S. MNEs. Because the dominant view in favor of horizontal FDI against vertical FDI in the previous literature results primarily from U.S. data, I empirically demonstrate that data sources on MNEs could partly explain weak evidence for vertical FDI.
Description
March 23, 2009
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2009-03
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Global COE Hi-Stat Discussion Paper Series ; No. 46
Relation
Related Identifier
URI
  http://gcoe.ier.hit-u.ac.jp/english/index.html
Number of Pages
39
Sponsorship
グローバルCOEプログラム = Global COE Program
Appears in Collections
Global COE Hi-Stat Discussion Paper Series
URL
https://hdl.handle.net/10086/17133