Japanese and U.S. Exports and Investment as Conduits of Growth / Jonathan Eaton, Akiko Tamura.

Format:

Book

Author/Creator:

Eaton, Jonathan.

Contributor:

National Bureau of Economic Research.

Tamura, Akiko.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5457.

NBER working paper series no. w5457

Language:

English

Subjects (All):

Exports.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Cambridge, Mass. : National Bureau of Economic Research, 1996.

Summary:

We develop a simple model of the choice between exploiting a technology in another country via export and via direct foreign investment. The model points to the destination country's size, level of technological sophistication, and distance from the source as factors in the decision. Moreover, it suggests that the effects of these variables may not only be nonhomogeneous but nonmonotonic as well. We use the model as a basis for estimating Japanese and U.S. exports and DFI positions around the world. Consistent with the theory we find that the importance of DFI relative to exports grows with population, although, contrary to our theory, the elasticity of DFI, as well as exports, with respect to population is less than one. We find that distance tends to inhibit DFI much less than it inhibits exports, as our theory predicts. We find some tendency for Japanese exports to rise relative to DFI as countries become more advanced with U.S. exports and DFI exhibiting the opposite tendency. Taking population, per capita income, factor endowments, and distance into account, we find Japan to be more open to U.S. exports than any region in the world except East Asia.

Notes:

Print version record

February 1996.