Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates

34 Pages Posted: 19 May 2012

See all articles by Richard Baldwin

Richard Baldwin

Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Toshihiro Okubo

University of Geneva - Graduate Institute of International Studies (HEI)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2012

Abstract

This paper applies a novel empirical approach to characterising the horizontal-ness and vertical-ness of affiliates based on Yeaple's complex FDI concept. In its simplest form, horizontal-ness is measured as affiliates' local sales share while their vertical-ness is measures as their share of non-local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal but those in North American are far more 'horizontal' than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four-way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks - especially in Asia. We posit several hypotheses that could be tested with our empirical approach.

Suggested Citation

Baldwin, Richard and Okubo, Toshihiro, Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates (May 2012). NBER Working Paper No. w18083. Available at SSRN: https://ssrn.com/abstract=2062716

Richard Baldwin (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Toshihiro Okubo

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland
+41 22 908 5900 (Phone)

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