Spillover Effects of Exporting on Local Firms

This study empirically examines the impact of increasing export activity of firms in regional cities on local businesses. National and local governments implement various policies to support firms and attract investment, aiming to promote exports and increase foreign direct investment (FDI) in Japan. While some firms have successfully expanded their markets, many local businesses remain unglobalized, limiting their growth. However, when firms expand through exports or FDI, they may form supply chains with local businesses, generating positive spillover effects on the regional economy. If such effects are confirmed, export promotion and FDI attraction policies could be even more effective than expected. Using microdata from Japanese manufacturing establishments aggregated at the municipality level, this study investigates the spillover effects of an increase in exporting establishments or export value on non-exporting establishments in the same municipality, focusing on their sales, employment, and wages per worker.