Linked versus Non-linked Firms in Innovation: The Effects of Economies of Network in Agglomeration in East Asia

This paper proposes a new mechanism linking innovation and network in developing economies to detect explicit production and information linkages and investigates the testable implications of these linkages using survey data gathered from manufacturing firms in East Asia. We found that firms with more information linkages tend to innovate more, have a higher probability of introducing new goods, introducing new goods to new markets using new technologies, and finding new partners located in remote areas. We also found that firms that dispatched engineers to customers achieved more innovations than firms that did not. These findings support the hypothesis that production linkages and face‐to‐face communication encourage product and process innovation.

Capability Matrix : A Framework for Analyzing Capabilities in Value Chains

This paper develops a Capability Matrix for analyzing capabilities of developing country firms that participate in global and national value chains. This is a generic framework to capture firm-level knowledge accumulation in the context of global and local industrial constellations, by integrating key elements of the global value chain (GVC) and technological capabilities (TC) approaches. The framework can visually portray characteristics of firms’ capabilities, and highlight a relatively overlooked factor in the GVC approach: local firms’ endogenous learning efforts in varieties of relationship with lead firms.

The determinants of offshore production by Multinational Corporations (MNCs) : a comparison of Japanese and US MNCs

This study employs confidential affiliate-level panel data to improve measures of foreign affiliate activities of Japanese firms in manufacturing sectors. Combining existing data on U.S. MNCs with the Japanese data, we illustrate the pattern and determinant of their foreign affiliate sales by destination market across countries and industries for the period 1989-2005. Among our results, Japanese and U.S. MNCs are similar in the substantial growth of their foreign affiliate sales and the importance of sales to local markets. However, Japanese MNCs are distinctive from U.S. MNCs in that Japanese affiliate sales in Asia were prominently higher in host markets with lower educational attainment.

Transport costs, distance, and time : evidence from the Japanese Census of Logistics

Geographic distance is a standard proxy for transport costs under the simple assumption that freight fees increase monotonically over space. Using the Japanese Census of Logistics, this paper examines the extent to which transport distance and time affect freight costs across shipping modes, commodity groups, and prefecture pairs. The results show substantial heterogeneity in transport costs and time across shipping modes. Consistent with an iceberg formulation of transport costs, distance has a significantly positive effect on freight costs by air transportation. However, I find the puzzling results that business enterprises are likely to pay more for short-distance shipments by truck, ship, and railroad transportation. As a plausible explanation, I discuss aggregation bias arising from freight-specific premiums for timely, frequent, and small-batch shipments.

Are trading partners complementary in international trade?

We use a unique dataset on trading transactions at the firm level to investigate a complementary effect in international transactions between sellers and buyers; trading transactions are more likely to be international when both sellers and buyers are large in size than when either sellers or buyers are large. Our econometric analysis provides evidence for the complementary effect between trading partners on the likelihood of international trade, which is most prominent for exports from North to South.

Tax differentials and inflow of foreign direct investments : evidence from foreign operations of U.S. multinational companies

This paper concerns the measurement of the impact of tax differentials across countries on inflow of Foreign Direct Investment (FDI) by using comprehensive data on the foreign operations of U.S. multinational corporations that has been collected by the Bureau of Economic Analysis (BEA), the U.S. Department of Commerce. In particular, this research focuses on examining: (1) how responsive FDI locations are to tax differentials across countries, (2) how different the tax effect on FDI inflow is between developed and developing countries, and (3) whether investment location decisions have become more or less sensitive to tax differences between countries over time ranging from the late 1990s to the early 2000s. Estimation results suggest that high rates of corporate income taxation are associated with reduced foreign assets of U.S. multinational firms in all industries by decreasing the return to foreign asset investment. Further, foreign assets of U.S. multinationals in all industries have become more responsive to non-income tax differentials across countries than to income tax differences from 1999 to 2004. Empirical estimates also indicate that foreign investment by American firms is associated with higher tax sensitivity more in developed countries than in those that are developing.