Firms and Foreign Markets: Internationalization Activities and Attitudes Toward Foreign Economic Policies

Abstract

Firm heterogeneity has been extensively linked to patterns in market engagement, particularly where foreign markets are concerned. Recent studies have extended the effects of firm heterogeneity to political markets, identifying its influence on policy stances and engagement in the policy process. This work has largely focused on trade, ignoring other aspects of economic policy with foreign-engagement implications. Using an original and representative survey of Japanese manufacturers, I identify patterns in a range of internationalization activities - direct and indirect importing/exporting, offshoring, and FDI - and assess the influence of these behaviors and heterogeneity in firm characteristics on attitudes toward a range of foreign economic policies including monetary policy, inward FDI, and temporary immigration. The results generate insights for the potential for coordinated political efforts between diverse producers for an understudied range of policies.

Keywords: Firm Heterogeneity, Foreign Direct Investment, Intermediated Trade, International Trade, Internationalization, Japanese Economy, Outsourcing

JEL Classification: F13, F14, F15, F23