Networked FDI: Sales and sourcing patterns of Japanese foreign affiliates

Author Name Richard BALDWIN (Graduate Institute, Geneva) / OKUBO Toshihiro (Keio University)
Creation Date/NO. April 2012 12-E-027
Research Project Study of the Creation of the Japanese Economy and Trade and Direct Investment
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Using firm-level data on the sales and sourcing patterns of Japanese affiliates, this paper suggests that very little foreign direct investment (FDI) falls neatly into the standard bins of horizontal, vertical and export-platform FDI. Most affiliates import some intermediates and export some output, suggesting a pattern that might be called "networked FDI." This suggests that the nature of FDI is influenced by "regional comparative advantage," i.e., the proximity of markets and suppliers.

Published: Richard Baldwin, Toshihiro Okubo, 2014. "Networked FDI: Sales and sourcing patterns of Japanese foreign affiliates," The World Economy, Vol. 37(8), pp. 1051-1080.