Essays on the relationships between foreign direct investment, international trade, and exchange rate volatility (Japan).

摘要

Foreign direct investment (FDI) and international trade play key roles in enhancing global technology transfer, fostering economic growth, and the increasing integration of the global economy. A country's market maturity level and export platform status are particularly important in determining the amount of FDI and trade that a country receives. This dissertation focuses on the host market characteristics, the FDI-trade interaction, and how exchange rate risk affects a nation's bilateral trade volume.; The first essay examines whether FDI is a complement or a substitute to the bilateral trade (export sales) and the extent to which FDI-trade relationship is affected by the host's market characteristics. In addition to examining the same problem at a disaggregated industry level, the second essay examines the allocation of industry-specific manufacturing FDI across different host countries. Both essays, respectively, use country- and industry-specific Japanese bilateral trade and outward FDI (establishment counts and values) into geographically and economically diverse host nations. Results from the aggregate country-level analysis show that Japanese FDI and export sales during 1989–1999 were complementary. However, the results are sensitive to host's maturity level and export platform status. Results from industry-level analysis show that the relationship between Japanese manufacturing FDI and trade is industry specific. For example, while Japanese outward FDI complements industry specific export sales in food, beverage and tobacco industries, in wood products, furniture, and basic metal manufacturing industries, it substitutes export sales.; The third essay investigates the effects of real exchange rate volatility due to shocks in both the fundamental and the microstructure component of the exchange rate on the volume of imports. Empirical results based on monthly bilateral trade data between the U.S., Canada, Germany and Hong Kong indicate that volatility in exchange rate due to shocks in the microstructure aspect of the exchange market has a trade depressing impact. The effect of volatility in the fundamental exchange rate on the volume of trade, on the other hand, is mixed, suggesting the possibility that importers of different commodity groups treat the effect of exchange risk in the fundamental component on their trading activities differently.