The effect of major roads upon the local economy:a study of industrial location and its effects

The economic effects of road building (beyond those accounted for in cost-benefit analysis) are not well understood. This thesis examines the issues surrounding those effects and attempts to clarify the relationship between road building and industrial location and to identify the effect on employment of that location. The literature reviewed leads to some doubt as to the efficacy of roads as an economic tool. A scries of interviews with representatives of business and property professionals in three areas adjacent to motorways is carried out. These covered the firms' location or relocation decisions, their production costs, transport needs and employment. The conclusions drawn echo the above statements based on reviewed literature: 1. There was a general lack of knowledge of transport within a firm despite subjects' very good understanding of the rest of the firms' operations. 2. The importance of major roads to the business location decision and its perceived importance to the operations of the firms was low. Property professionals sec roads as an effective marketing tool. 3. Firms have a tendency to shed labour upon relocation although this does not necessarily constitute a net loss of employment but a redistribution. Recommendations are made for further research.

Spillovers from FDI and local networks:the importance of transactional linkages and vertical keiretsu in Japan

Purpose – The purpose of this paper is to explore the importance of host country networks and organisation of production in the context of international technology transfer that accompanies foreign direct investment (FDI). Design/methodology/approach – The empirical analysis is based on unbalanced panel data covering Japanese firms active in two-digit manufacturing sectors over a seven-year period. Given the self-selection problem affecting past sectoral-level studies, using firm-level panel data is a prerequisite to provide robust empirical evidence. Findings – While Japan is thought of as being a technologically advanced country, the results show that vertical productivity spillovers from FDI occur in Japan, but they are sensitive to technological differences between domestic firms and the idiosyncratic Japanese institutional network. FDI in vertically organised keiretsu sectors generates inter-industry spillovers through backward and forward linkages, while FDI within sectors linked to vertical keiretsu activities adversely affects domestic productivity. Overall, our results suggest that the role of vertical keiretsu is more prevalent than that of horizontal keiretsu. Originality/value – Japan’s industrial landscape has been dominated by institutional clusters or networks of inter-firm organisations through reciprocated, direct and indirect ties. However, interactions between inward investors and such institutionalised networks in the host economy are seldom explored. The role and characteristics of local business groups, in the form of keiretsu networks, have been investigated to determine the scale and scope of spillovers from inward FDI to Japanese establishments. This conceptualisation depends on the institutional mechanism and the market structure through which host economies absorb and exploit FDI.