The Determinants of Offshore Production by Multinational Corporations (MNCs): A Comparison of Japanese and US MNCs

Discussion Papers


by Toshiyuki Matsuura, Kiyoyasu Tanaka, Shujiro Urata

April 2010


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.

Keywords: Multinational firm, FDI, Japan, U.S., skill endowment
JEL classification: F21, F23

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