Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086124 | Japan and the World Economy | 2016 | 40 Pages |
Abstract
With the proliferation of regional economic integration, investment liberalization has gained in importance. This paper conducts counterfactual policy experiments to simulate the response of multinational firms to a regional decline in investment costs. We find evidence of investment creation effects at the aggregate level. While there is weak evidence of investment diversion effects, the non-participation in regional integration discourages multinational activity of non-member countries. As less productive firms experience the extensive-margin growth strongly, the effects differ significantly by multinational firms with heterogeneous productivity.
Related Topics
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Authors
Kiyoyasu Tanaka, Shawn Arita,