Firm Size and Determinants of Foreign Direct Investment

CERGE-EI Working Paper No. 135

25 Pages Posted: 6 Jul 1999

See all articles by Yuko Kinoshita

Yuko Kinoshita

International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 1998

Abstract

This paper studies the locational determinants of foreign direct investment (FDI) by Japanese manufacturing firms in seven Asian countries by utilizing the 1993 survey data. I show that different size-groups of firms react to different factors in the host country in making the foreign investment decisions. Low labor cost and sufficient infrastructure encourage small firms to invest in a certain country while, for large firms, market size of the host country and strategic considerations (e.g., whether competitors invested in the country or not) are most important for their locational decisions. Overall, availability of cheap labor is not necessarily an important factor for Japanese FDI in Asia.

JEL Classification: F23, L60, O53

Suggested Citation

Kinoshita, Yuko, Firm Size and Determinants of Foreign Direct Investment (December 1998). CERGE-EI Working Paper No. 135, Available at SSRN: https://ssrn.com/abstract=154611 or http://dx.doi.org/10.2139/ssrn.154611

Yuko Kinoshita (Contact Author)

International Monetary Fund (IMF) ( email )

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University of Michigan, William Davidson Institute

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Centre for Economic Policy Research (CEPR)

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