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N° 2008-24 |
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| October 2008 |
The Location of Japanese MNC Affiliates:
Agglomeration, Spillovers and Firm Heterogeneity |
Tomohiko Inui
Toshiyuki Matsuura
Sandra Poncet |
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| We examine the location choices of the foreign affiliates of Japanese manufacturing firms,
using a new data set that matches parents to the affiliates they created over the 1995-2003
period. The analysis is based on new economic geography theory, and thus focuses on the
effect of market and supplier access, as well as production and trade costs. Our aim is
twofold. First, we investigate the importance of agglomeration and spillover effects on
firms’ decisions via variables showing the presence of Japanese affiliates in the host
countries, and Japanese multinational firms at home. Our results confirm the economic
importance of information-sharing and network effects, both at home and in the host
country, in addition to traditional factors relating to production and transaction costs, and
market and supply access. Second, we explore whether the effects of the key determinants
of location choice vary according to the characteristics of the investing firm and the
affiliate. We find that less productive and smaller parents are more likely to create an
affiliate in China rather than in Western Europe or an OECD country. Moreover lessproductive
firms seem more sensitive to distance-related costs and low institutional quality,
but are more responsive to the presence of Japanese firms and the presence of a Japanese
External Trade Organization (JETRO) agency in the host country. |
Non-technical summary |
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Résumé
non-technique
en français |
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| Full text |
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| Location choice; multinational firms; conditional logit model |
Keywords |
| F12; F15 |
JEL classification |
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