Technological capabilities and Japanese foreign direct investment in the United States

Abstract

Examines the effect of relative technological capabilities on Japanese direct investment into the US by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R&D capability and industry structure on a count measure of Japanese entries across 297 industries. The results indicate that Japanese direct investment in the US is drawn to industries intensive in R&D expenditures summed across both countries; voluntary restraints on Japanese exports encourage direct investment. When the entries are disaggregated by mode there is a significant indication that joint ventures are used for the sourcing and sharing of US technological capabilities. -from Authors