TECHNOLOGICAL CAPABILITIES AND JAPANESE FOREIGN DIRECT-INVESTMENT IN THE UNITED-STATES

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