Chapter 8 Location Choice of Japanese Multinationals: Country Characteristics or Region Characteristics?

In the present global era in which firms choose the location of their plants beyond national borders, location characteristics are important for attracting multinational enterprises (MNEs). The better access to countries with large market is clearly attractive for MNEs. For example, special treatments on tariffs such as the Generalized System of Preferences (GSP) are beneficial for MNEs whose home country does not have such treatments. Not only such country characteristics but also region characteristics (i.e. province-level or city-level ones) matter, particularly in the case that location characteristics differ widely between a nation's regions. The existence of industrial concentration, that is, agglomeration, is a typical regional characteristic. It is with consideration of these country-level and region-level characteristics that MNEs decide their location abroad. A large number of academic studies have investigated in what kinds of countries MNEs locate, i.e. location choice analysis. Employing the usual new economic geography model (i.e. constant elasticity of substitution (CES) utility function, Dixit-Stiglitz monopolistic competition, and ice-berg trade costs), the literature derives the profit function, of which coefficients are estimated using maximum likelihood procedures. Recent studies are as follows: Head, Rise, and Swenson (1999) for Japanese MNEs in the US; Belderbos and Carree (2002) for Japanese MNEs in China; Head and Mayer (2004) for Japanese MNEs in Europe; Disdier and Mayer (2004) for French MNEs in Europe; Castellani and Zanfei (2004) for large MNEs worldwide; Mayer, Mejean, and Nefussi (2007) for French MNEs worldwide; Crozet, Mayer, and Mucchielli (2004) for MNEs in France; and Basile, Castellani, and Zanfei (2008) for MNEs in Europe. At the present time, three main topics can be found in this literature. The first introduces various location elements as independent variables. The above-mentioned new economic geography model usually yields the profit function, which is a function of market size, productive factor prices, price of intermediate goods, and trade costs. As a proxy for the price of intermediate goods, the measure of agglomeration is often used, particularly the number of manufacturing firms. Some studies employ more disaggregated numbers of manufacturing firms, such as the number of manufacturing firms with the same nationality as the firms choosing the location (e.g., Head et al., 1999; Crozet et al., 2004) or the number of firms belonging to the same firm group (e.g., Belderbos and Carree, 2002). As part of trade costs, some investment climate measures have been examined: free trade zones in the US (Head et al., 1999), special economic zones and opening coastal cities in China (Belderbos and Carree, 2002), and Objective 1 structural funds and cohesion funds in Europe (Basile et al., 2008). Second, the validity of proxy variables for location elements is further examined. Head and Mayer (2004) examine the validity of market potential on location choice. They propose the use of two measures: the Harris market potential index (Harris, 1954) and the Krugman-type index used in Redding and Venables (2004). The Harris-type index is simply the sum of distance-weighted real GDP. They employ the Krugman-type market potential index, which is directly derived from the new economic geography model, as it takes into account the extent of competition (i.e. price index) and is constructed using estimators of importing country dummy variables in the well-known gravity equation, as in Redding and Venables (2004). They find that "theory does not pay", in the sense that the Harris market potential outperforms Krugman's market potential in both the magnitude of its coefficient and the fit of the model to be estimated. The third topic explores the substitution of location by examining inclusive values in the nested-logit model. For example, using firm-level data on French investments both in France and abroad over the 1992-2002 period, Mayer et al. (2007) investigate the determinants of location choice and assess empirically whether the domestic economy has been losing attractiveness over the recent period or not. The estimated coefficient for inclusive value is strongly significant and near unity, indicating that the national economy is not different from the rest of the world in terms of substitution patterns. Similarly, Disdier and Mayer (2004) investigate whether French MNEs consider Western and Eastern Europe as two distinct groups of potential host countries by examining the coefficient for the inclusive value in nested-logit estimation. They confirm the relevance of an East-West structure in the country location decision and furthermore show that this relevance decreases over time. The purpose of this paper is to investigate the location choice of Japanese MNEs in Thailand, Cambodia, Laos, Myanmar, and Vietnam, and is closely related to the third topic mentioned above. By examining region-level location choice with the nested-logit model, I investigate the relative importance of not only country characteristics but also region characteristics. Such investigation is invaluable particularly in the case of location choice in those five countries: industrialization remains immature in those countries which have not yet succeeded in attracting enough MNEs, and as a result, it is expected that there are not yet crucial regional variations for MNEs within such a nation, meaning the country characteristics are still relatively important to attract MNEs. To illustrate, in the case of Cambodia and Laos, one of the crucial elements for Japanese MNEs would be that LDC preferential tariff schemes are available for exports from Cambodia and Laos. On the other hand, in the case of Thailand and Vietnam, which have accepted a relatively large number of MNEs and thus raised the extent of regional inequality, regional characteristics such as the existence of agglomeration would become important elements in location choice. Our sample countries seem, therefore, to offer rich variations for analyzing the relative importance between country characteristics and region characteristics. Our empirical strategy has a further advantage. As in the third topic in the location choice literature, the use of the nested-logit model enables us to examine substitution patterns between country-based and region-based location decisions by MNEs in the concerned countries. For example, it is possible to investigate empirically whether Japanese multinational firms consider Thailand/Vietnam and the other three countries as two distinct groups of potential host countries, by examining the inclusive value parameters in nested-logit estimation. In particular, our sample countries all experienced dramatic changes in, for example, economic growth or trade costs reduction during the sample period. Thus, we will find the dramatic dynamics of such substitution patterns. Our rigorous analysis of the relative importance between country characteristics and region characteristics is invaluable from the viewpoint of policy implications. First, while the former characteristics should be improved mainly by central government in each country, there is sometimes room for the improvement of the latter characteristics by even local governments or smaller institutions such as private agencies. Consequently, it becomes important for these smaller institutions to know just how crucial the improvement of region characteristics is for attracting foreign companies. Second, as economies grow, country characteristics become similar among countries. For example, the LCD preferential tariff schemes are available only when a country is less developed. Therefore, it is important particularly for the least developed countries to know what kinds of regional characteristics become important following economic growth; in other words, after their country characteristics become similar to those of the more developed countries. I also incorporate one important characteristic of MNEs, namely, productivity. The well-known Helpman-Melitz-Yeaple model indicates that only firms with higher productivity can afford overseas entry (Helpman et al., 2004). Beyond this argument, there may be some differences in MNEs' productivity among our sample countries and regions. Such differences are important from the viewpoint of "spillover effects" from MNEs, which are one of the most important results for host countries in accepting their entry. The spillover effects are that the presence of inward foreign direct investment (FDI) aises domestic firms' productivity through various channels such as imitation. Such positive effects might be larger in areas with more productive MNEs. Therefore, it becomes important for host countries to know how much productive firms are likely to invest in them. The rest of this paper is organized as follows. Section 2 takes a brief look at the worldwide distribution of Japanese overseas affiliates. Section 3 provides an empirical model to examine their location choice, and lastly, we discuss future works to estimate our model.

Analysis of genetic variability in a sample of the durum wheat (Triticum durum Desf.) Spanish collection based on gliadin markers

In this work gliadin proteins were used to analyse the genetic variability in a sample of the durum wheat Spanish collection conserved at the CRF-INIA. In total 38 different alleles were identified at the loci Gli-A1, Gli-A3, Gli-B5, Gli-B1, Gli-A2 and Gli-B2. All the gliadin loci were polymorphic, possessed large genetic diversity and small and large differentiation within and between varieties, respectively. The Gli-A2 and Gli-B2 loci were the most polymorphic, the most fixed within varieties and the most useful to distinguish among varieties. Alternatively, Gli-B1 locus presented the least genetic variability out of the four main loci Gli-A1, Gli-B1, Gli-A2 and Gli-B2. The Gli-B1 alleles coding for the gliadin γ-45, associated with good quality, had an accumulated frequency of 69.7%, showing that the Spanish germplasm could be a good source for breeding quality. The Spanish landraces studied showed new gliadin alleles not catalogued so far. These new alleles might be associated with specific Spanish environment factors. The large number of new alleles identified also indicates that durum wheat Spanish germplasm is rather unique.

Momentum distributions from three-body decaying 9Be and 9B resonances

The complex-rotated hyperspherical adiabatic method is used to study the decay of lowlying 9Be and 9B resonances into α, α and n or p. We consider six low-lying resonances of 9Be (1/2±, 3/2± and 5/2±) and one resonance of 9B (5/2−) to compare with. The properties of the resonances at large distances are decisive for the momentum distributions of the three decaying fragments. Systematic detailed energy correlations of Dalitz plots are presented.

Sample Size vs. Bias in Defect Prediction

Most empirical disciplines promote the reuse and sharing of datasets, as it leads to greater possibility of replication. While this is increasingly the case in Empirical Software Engineering, some of the most popular bug-fix datasets are now known to be biased. This raises two significants concerns: first, that sample bias may lead to underperforming prediction models, and second, that the external validity of the studies based on biased datasets may be suspect. This issue has raised considerable consternation in the ESE literature in recent years. However, there is a confounding factor of these datasets that has not been examined carefully: size. Biased datasets are sampling only some of the data that could be sampled, and doing so in a biased fashion; but biased samples could be smaller, or larger. Smaller data sets in general provide less reliable bases for estimating models, and thus could lead to inferior model performance. In this setting, we ask the question, what affects performance more? bias, or size? We conduct a detailed, large-scale meta-analysis, using simulated datasets sampled with bias from a high-quality dataset which is relatively free of bias. Our results suggest that size always matters just as much bias direction, and in fact much more than bias direction when considering information-retrieval measures such as AUC and F-score. This indicates that at least for prediction models, even when dealing with sampling bias, simply finding larger samples can sometimes be sufficient. Our analysis also exposes the complexity of the bias issue, and raises further issues to be explored in the future.

Reply to Comment on ``Towards a large deviation theory for strongly correlated systems''

The computational study commented by Touchette opens the door to a desirable generalization of standard large deviation theory for special, though ubiquitous, correlations. We focus on three interrelated aspects: (i) numerical results strongly suggest that the standard exponential probability law is asymptotically replaced by a power-law dominant term; (ii) a subdominant term appears to reinforce the thermodynamically extensive entropic nature of q-generalized rate function; (iii) the correlations we discussed, correspond to Q -Gaussian distributions, differing from Lévy?s, except in the case of Cauchy?Lorentz distributions. Touchette has agreeably discussed point (i), but, unfortunately, points (ii) and (iii) escaped to his analysis. Claiming the absence of connection with q-exponentials is unjustified.

Cálculo de la recarga natural en grandes áreas, en función de la litología y la precipitación = Calculation of natural recharge in large areas, as a function of lithology and rainfall

En una región amplia como España se demuestra —mediante inferencias estadísticas sobre una muestra completa de 875 manantiales en los que se conoce su caudal medio y la litología de su área de alimentación y que han sido agrupados en regiones de distinta pluviometría— que la recarga media anual es una fracción fija de la precipitación media para cada litología. Se han establecido así unas tasas de recarga respecto de la precipitación para seis grupos litológicos de diferente permeabilidad: arenas, gravas y formaciones aluviales en general, 8.3%; conglomerados, 5.6%; areniscas, 7.3%; calizas y dolomías, 34.3%; margas, margocalizas, limos y arcillas, 3.3%; otras rocas, 1.3%. Teniendo en cuenta la representatividad de España, la cual tiene una gran variabilidad de litología, pluviometría, topografía, etcétera, estas tasas de recarga respecto de la precipita-ción son probablemente valores cuasi universales que pueden ser utilizados para estimar la recarga media o los recursos hídricos subterráneos medios de regiones amplias en cualquier parte del mundo, salvo en regiones especiales, como las que tienen permafrost, por ejemplo. En todo caso, estas tasas de recarga podrían ser retocadas para cada región según sus particulares características. Los datos de precipitación y litología son muy corrientes, por lo que el método puede ser ampliamente utilizado para completar balances hidráulicos.In a region as large as Spain, annual mean recharge is shown to be a fixed proportion of the mean rainfall for each lithology. This determination is based on statistical inferences from a complete sample of 875 springs for which mean flow and catchment areas are known and which have been grouped into distinct rainfall regions. Recharge rates have thus been established with respect to rainfall for six lithological groups with different permeability: sands, gravels and generally alluvial formations, 8.3%; conglomerates, 5.6%; sandstones, 7.3%; limestone and dolomite 34.3%; marls, marly limestones, silts and clays, 3.3%; and hard rocks, 1.3%. Considering the representativeness of Spain, which is large in size and has a highly varied lithology, topography and rainfall, these recharge rates for rainfall are probably quasi-universal values that can be used to estimate average recharge or average groundwater resources of large regions in any part of the world (except in special cases such as areas with permafrost, for example). For any case, these recharge rates can be adapted to each region according to its particular characteristics. Rainfall and lithology data are very common, and so the method can be widely used to calculate hydraulic balances.

In-field assessment of batteries and PV modules in a large photovoltaic rural electrification programme

Assuring the sustainability of quality in photovoltaic rural electrification programmes involves enhancing the reliability of the components of solar home systems as well as the characterization of the overall programme cost structure. Batteries and photovoltaic modules have a great impact on both the reliability and the cost assessment, the battery being the weakest component of the solar home system and consequently the most expensive element of the programme. The photovoltaic module, despite being the most reliable component, has a significant impact cost-wise on the initial investment, even at current market prices. This paper focuses on the in-field testing of both batteries and photovoltaic modules working under real operating conditions within a sample of 41 solar home systems belonging to a large photovoltaic rural electrification programme with more than 13,000 installed photovoltaic systems. Different reliability parameters such as lifetime have been evaluated, taking into account different factors, for example energy consumption rates, or the manufacturing quality of batteries. A degradation model has been proposed relating both loss of capacity and time of operation. The user e solar home system binomial is also analysed in order to understand the meaning of battery lifetime in rural electrification.

Computer simulation of the interplay between fractal structures and surrounding heterogeneous multifractal distributions. Applications

In a large number of physical, biological and environmental processes interfaces with high irregular geometry appear separating media (phases) in which the heterogeneity of constituents is present. In this work the quantification of the interplay between irregular structures and surrounding heterogeneous distributions in the plane is made For a geometric set image and a mass distribution (measure) image supported in image, being image, the mass image gives account of the interplay between the geometric structure and the surrounding distribution. A computation method is developed for the estimation and corresponding scaling analysis of image, being image a fractal plane set of Minkowski dimension image and image a multifractal measure produced by random multiplicative cascades. The method is applied to natural and mathematical fractal structures in order to study the influence of both, the irregularity of the geometric structure and the heterogeneity of the distribution, in the scaling of image. Applications to the analysis and modeling of interplay of phases in environmental scenarios are given.

Equilibrium distributions of topological states in circular DNA: Interplay of supercoiling and knotting

Two variables define the topological state of closed double-stranded DNA: the knot type, K, and ΔLk, the linking number difference from relaxed DNA. The equilibrium distribution of probabilities of these states, P(ΔLk, K), is related to two conditional distributions: P(ΔLk|K), the distribution of ΔLk for a particular K, and P(K|ΔLk) and also to two simple distributions: P(ΔLk), the distribution of ΔLk irrespective of K, and P(K). We explored the relationships between these distributions. P(ΔLk, K), P(ΔLk), and P(K|ΔLk) were calculated from the simulated distributions of P(ΔLk|K) and of P(K). The calculated distributions agreed with previous experimental and theoretical results and greatly advanced on them. Our major focus was on P(K|ΔLk), the distribution of knot types for a particular value of ΔLk, which had not been evaluated previously. We found that unknotted circular DNA is not the most probable state beyond small values of ΔLk. Highly chiral knotted DNA has a lower free energy because it has less torsional deformation. Surprisingly, even at |ΔLk| > 12, only one or two knot types dominate the P(K|ΔLk) distribution despite the huge number of knots of comparable complexity. A large fraction of the knots found belong to the small family of torus knots. The relationship between supercoiling and knotting in vivo is discussed.

The repetition of large-earthquake ruptures.

This survey of well-documented repeated fault rupture confirms that some faults have exhibited a "characteristic" behavior during repeated large earthquakes--that is, the magnitude, distribution, and style of slip on the fault has repeated during two or more consecutive events. In two cases faults exhibit slip functions that vary little from earthquake to earthquake. In one other well-documented case, however, fault lengths contrast markedly for two consecutive ruptures, but the amount of offset at individual sites was similar. Adjacent individual patches, 10 km or more in length, failed singly during one event and in tandem during the other. More complex cases of repetition may also represent the failure of several distinct patches. The faults of the 1992 Landers earthquake provide an instructive example of such complexity. Together, these examples suggest that large earthquakes commonly result from the failure of one or more patches, each characterized by a slip function that is roughly invariant through consecutive earthquake cycles. The persistence of these slip-patches through two or more large earthquakes indicates that some quasi-invariant physical property controls the pattern and magnitude of slip. These data seem incompatible with theoretical models that produce slip distributions that are highly variable in consecutive large events.

Large electrostatic differences in the binding thermodynamics of a cationic peptide to oligomeric and polymeric DNA.

Results presented here demonstrate that the thermodynamics of oligocation binding to polymeric and oligomeric DNA are not equivalent because of long-range electrostatic effects. At physiological cation concentrations (0.1-0.3 M) the binding of an oligolysine octacation KWK6-NH2 (+8 charge) to single-stranded poly(dT) is much stronger per site and significantly more salt concentration dependent than the binding of the same ligand to an oligonucleotide, dT(pdT)10 (-10 charge). These large differences are consistent with Poisson-Boltzmann calculations for a model that characterizes the charge distributions with key preaveraged structural parameters. Therefore, both the experimental and the theoretical results presented here show that the polyelectrolyte character of a polymeric nucleic acid makes a large contribution to both the magnitude and the salt concentration dependence of its binding interactions with simple oligocationic ligands.

Difficulties with unification.

The difficulties perceived in the orientation-based unified scheme models, when confronted with the observational data, are pointed out. It is shown that in meter-wavelength selected samples, which presumably are largely free of an orientation bias, the observed numbers of quasars versus radio galaxies are not in accordance with the expectations of the unified scheme models. The observed number ratios seem to depend heavily on the redshift, fluxdensity, or radio luminosity levels of the selected sample. This cannot be explained within the simple orientation-based unified scheme with a fixed average value of the half-opening angle (c approximately 45 degrees ) for the obscuring torus that supposedly surrounds the nuclear optical continuum and the broad-line regions. Further, the large differences seen between radio galaxies and quasars in their size distributions in the luminosity-redshift plane could not be accommodated even if I were to postulate some suitable cosmological evolution of the opening angle of the torus. Some further implications of these observational results for the recently proposed modified versions of the unified scheme model are pointed out.

Sample size determination in combinatorial chemistry.

Combinatorial chemistry is gaining wide appeal as a technique for generating molecular diversity. Among the many combinatorial protocols, the split/recombine method is quite popular and particularly efficient at generating large libraries of compounds. In this process, polymer beads are equally divided into a series of pools and each pool is treated with a unique fragment; then the beads are recombined, mixed to uniformity, and redivided equally into a new series of pools for the subsequent couplings. The deviation from the ideal equimolar distribution of the final products is assessed by a special overall relative error, which is shown to be related to the Pearson statistic. Although the split/recombine sampling scheme is quite different from those used in analysis of categorical data, the Pearson statistic is shown to still follow a chi2 distribution. This result allows us to derive the required number of beads such that, with 99% confidence, the overall relative error is controlled to be less than a pregiven tolerable limit L1. In this paper, we also discuss another criterion, which determines the required number of beads so that, with 99% confidence, all individual relative errors are controlled to be less than a pregiven tolerable limit L2 (0 < L2 < 1).

Finite-size scaling analysis of the distributions of pseudo-critical temperatures in spin glasses

Using the results of large scale numerical simulations we study the probability distribution of the pseudo critical temperature for the three dimensional Edwards Anderson Ising spin glass and for the fully connected Sherrington-Kirkpatrick model. We find that the behaviour of our data is nicely described by straightforward finitesize scaling relations.