Journal of Industry, Competition and Trade

, Volume 16, Issue 4, pp 403–422

How Does FDI Affect Productivity at Home?: Evidence from a Plant-Level Analysis

  • Kazunobu Hayakawa
  • Toshiyuki Matsuura
  • Kazuyuki Motohashi
Article
  • 215 Downloads

Abstract

This study investigates the effect of foreign direct investments (FDI) on home productivity using plant-level data rather than firm-level data. Our results are consistent with the theoretical predictions. Horizontal FDI (HFDI) does not have a significantly positive effect on home productivity in plants that have the same activities abroad. In contrast, vertical FDI (VFDI) significantly enhances productivity in plants with an input–output relationship with activities relocated abroad. Furthermore, focusing on FDI in East Asia, the productivity improvements at home through VFDI are even greater, which might be caused by significant differences in factor prices between Japan and host countries.

Keywords

Productivity FDI Japan System GMM 

JEL Classification

F23 H32 O53 

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Kazunobu Hayakawa
    • 1
  • Toshiyuki Matsuura
    • 2
  • Kazuyuki Motohashi
    • 3
  1. 1.Institute of Developing EconomiesChibaJapan
  2. 2.Keio Economic ObservatoryKeio UniversityMinato-kuJapan
  3. 3.Department of Technology Management for Innovation, School of EngineeringThe University of TokyoTokyoJapan

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