Japanese Foreign Direct Investment and Regional Trade

ByGabrielle Lipworth, Tamim Bayoumi

August 1, 1997

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine the relationship between Japanese FDI outflows, domestic and foreign fixed investment, and the exchange rate. The results indicate that aggregate FDI outflows have been driven by investment in Japan and the exchange rate, while the geographic distribution of such investment has been influenced by foreign economic conditions. We also find that FDI outflows have a temporary impact on exports but a permanent effect on imports. We find no evidence that behavior with respect to East Asia differs from that with respect to North America or Europe.

Subject: Balance of payments, Exports, Financial institutions, Foreign direct investment, Foreign exchange, International trade, Real exchange rates, Stocks, Trade balance

Keywords: Asia and Pacific, East Asia, Exports, FDI, FDI flow, FDI inflow, FDI outflow, FDI regression, FDI stock, Foreign direct investment, Hollowing Out, North America, Northern Europe, Real exchange rates, stock of FDI, Stocks, Trade balance, Trade Linkages, WP

Pages:
35
Volume:
1997
DOI:
https://doi.org/10.5089/9781451948165.001
Issue:
103
Series:
Working Paper No. 1997/103
Stock No:
WPIEA1031997
ISBN:
9781451948165
ISSN:
1018-5941

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