| Abstract: |
This paper uses a proportional hazard model to study foreign direct investment
by Japanese manufacturers in Europe between 1970 and 1994. We divide each
firm’s investment total into a sequence of individual investment decisions and
analyze how firm-specific characteristics affect each decision. We find that
total factor productivity is a significant determinant of a firm’s initial and
subsequent investments. Parent-firm size does not have a significant influence
on the initial decision to invest. Large firms simply have more investments
than smaller firms. Other firm-specific characteristics, such as the R&D
intensity, export share and keiretsu membership, also play a role in the
investment process. |