During the 1980s, U.S. and Japanese multinationals were attracted by some similar country characteristics: low wage inflation, low country risk, good infrastructure, and an educated work force. Both groups of investors displayed a persistence, being strongly attracted to locations with significant past investment. Japanese firms started the decade as somewhat more fluid, but as their investment levels surged, they became much more persistent. Overall, U.S. firms were more influenced by domestic market conditions and moved contrary to changes in host country trade intensity. Japanese investment had a somewhat greater affinity for trade, reflecting their long-standing interest in East Asia. Some limited evidence suggests that factors driving the two groups of investors converged in the second half of the 1980s. JEL Classification: J441, J442.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics