The effects of the chemical control notification laws on foreign direct investment
2005
Araki, S. (Keio Univ., Tokyo (Japan))
This study examines how Japanese firms' decisions about the overseas production activities are influenced by economic and socio-economic characteristics of host country. The focus has particularly set on the impact of the chemical control notification laws , which may deter the direct investment. The empirical analysis utilizing the logit model has been conducted on the foreign direct investment decision made by Japanese firms which engaged in chemical production during the 1980 s. In addition to using aggregated data from the Ministry of Finance, the study takes special care to use information on individual firms by using data from Toyokeizaishinpousya. The use of such disaggregated firm level data is the distinguishing feature of this study. The results indicate that implementing the chemical control notification laws has a negative impact on the inflow of the foreign direct investment. The results also show that these factors such as the decrease in labor cost, the market size, the country credit, and the agglomeration of the industry attract foreign direct investment.
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