Technical Report Impact of supply chain network structure on FDI: Theory and evidence

Itoh, Ryo  ,  Nakajima, Kentaro

2016-03 , Institute of Economic Research, Hitotsubashi University
This study investigates how the structure of a supply chain network influences the FDI decisions of firms embedded in the network. We theoretically describe firms' FDI decisions through a coordination game of a fixed network with incomplete information. We show that the network effect in the equilibrium can be represented by Katz-Bonacich centrality. Firms with a larger Katz-Bonacich centrality than other firms are more likely to engage in FDI. We empirically test this prediction with disaggregated inter-firm transaction network data of 115,111 Japanese firms and confirm that the Katz-Bonacich centrality has a significantly positive, robust effect on firms' FDI engagements.
基盤研究(S) = Grants-in-Aid for Scientific Research (S)

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