Internationalization of Japanese Firms: Evidence from Firm-level Data

New Theoretical and Empirical Analysis of Firms' Internationalization

This book takes a comprehensive look at Japanese firms engaging in export and foreign direct investment (FDI) and develops new methods and data to investigate the internationalization of firms, which is a focus issue in international trade. Using micro-level data, the book provides an introduction to the theoretical and statistical analysis of internationalization modes of Japanese firms with productivity heterogeneity. It makes clear that although the productivity of internationalized Japanese firms is higher on average than that of firms serving only the domestic market, the difference in productivity between exporters and FDI firms is not as obvious in comparison with that of their counterparts in the United States and Europe. Focusing on this point, the book analyzes not only productivity heterogeneity among firms, but also unobserved firm heterogeneity other than productivity heterogeneity, industry-specific factors, market-specific factors such as market size, and variable and fixed costs for export and FDI in destination countries. This in-depth investigation reveals how those factors causes the modes of Japanese firms' internationalization to differ from those in the United States and Europe. Further analysis focuses on the effects of match quality and organizational and institutional factors in the market on firms' exports, and FDI. Each article in this book, which is written by members of the research team from RIETI, is unique in using detailed firm-level panel data of Japanese government statistics.