Institute for Economic Studies, Keio University Keio-IES Discussion Paper Series Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity Tadashi Ito, Toshiyuki Matsuura, Yang Chih-Hai 16 November, 2016 DP2016-025 http://ies.keio.ac.jp/en/publications/6946 Institute for Economic Studies, Keio University 2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan
[email protected] 16 November, 2016 Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity Tadashi Ito, Toshiyuki Matsuura, Yang Chih-Hai Keio-IES DP2016-025 16 November, 2016 JEL classification: F14; F21; F23 Keywords: FDI by SMEs; Trade duration; Intermediate goods; Agglomeration Abstract The concern regarding the hollowing out by FDI has re-emerged in Japan, with both large and small firms relocating their plants to China since the late 1990s. This study sheds lights on the effects of agglomeration and firm characteristics upon the complementary relationship between FDI and import of intermediate input from home country, which has been overlooked in the literature. Estimating the duration model of Japanese affiliates’ input trade by using parent–affiliate, product- level data from 2000 to 2006, we found while firms in agglomerated regions with more foreign affiliates shorten its duration, small firms import for a longer duration. Tadashi Ito Faculty of International Social Science, Gakushuin University 1-5-1 Mejiro, Toshima-ku, Tokyo 171-0031, Japan
[email protected] Toshiyuki Matsuura Keio Economic Observatory, Keio University 2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan
[email protected] Yang Chih-Hai National Central University No.