Technological Constraints,Firm Heterogeneity,and Location Choice of Multinational Enterprises

This paper aims to examine the relationship between the location choices of multinational enterprises and their productivity considering the North–South differences in regard to technological constraints. We find that home firms with the highest level of productivity choose to undertake foreign direct investment (FDI) in the developed countries and they choose to export to, rather than do FDI in, developing countries. This result explains why not many high tech industries exist in developing countries. Using Japanese firm level data, we also confirm that Japanese high tech firms tend to undertake FDI in developed countries, but hesitate to invest in developing countries empirically.     

Foreign direct investment,international trade,and firm heterogeneity

We present an asymmetric model with firm heterogeneity and foreign direct investment (FDI) from a developed country to a developing country. We found that the successful entry firms could be sorted from highest to lowest according to productivity as reimport firms, FDI firms, export firms, and domestic firms. We also found that FDI decreases (increases) the gross national income of the developed (developing) country, but it can either increase or decrease the world income according to the level of the relative propensity to spend. In addition, we demonstrated that FDI influences welfare through variations in average price, national income, and the number of types of goods.     

Japan's inflation under the Bretton Woods system: How large was the Balassa–Samuelson effect?

Japan's real exchange rate appreciation during the post-WWII manufacturing-led growth period has been regarded as a classical example of the Balassa–Samuelson effect. We choose the most conspicuous sub-period—1956–1970—to confirm the effect. Japan was in a rapid growth period under the U.S. dollar peg (real GDP growth, 9.7% per annum). The nominal anchor was weak as Japan's inflation rate (GDP deflator-based, 5.4%) was markedly higher than the U.S. rate (2.6%) during the 15-year period. The decomposition of the annual 2.7% (geometric) Japan–U.S. inflation rate gap (real exchange rate appreciation of the Japanese yen) reveals that the Balassa–Samuelson effect accounted for 0.7%; most of the real exchange rate appreciation (1.7%) was attributed to greater price increases in Japan's tradables. Although Japan's tradable sector achieved high TFP growth, the joint effect of the tradable–nontradable TFP growth difference between the two economies was too small to generate a sizable Balassa–Samuelson effect. Japan's example may suggest that even in rapidly growing economies, the magnitude of the effect in long-run real exchange rate appreciation is generally modest.     

Employment Adjustments in Japanese Firms During the Current Crisis

In this article we describe the severity of the current recession and depict the resultant harsh modes of employment adjustments. As a benchmark for comparison, we refer as frequently as possible to the recession that followed the first oil crisis. Macro indices include the extent of various employment adjustments, the roles of "shock–absorbing" industries, and the impact of public employment polices. As sources of micro–level data, we examine some 30 publicly owned, large–scale firms during both the current recession and the 1970s crisis. To further clarify the situation, we detail employment adjustments carried out by two "seriously wounded" firms.     

Assessing the gains from deregulation in Japan's international telecommunications industry

The Japanese government terminated the monopoly of international telecommunications service by Kokusai Denshin Denwa (KDD) as part of the regulatory reform in telecommunications in 1985. Two new carriers entered the market in 1989. In defending its market share, KDD intensified cost reduction efforts and accepted lower profitability in order to carry out a series of sharp rate reductions. I have assessed the size of the net welfare gain associated with the deregulation. Deregulation brought about a 22.2% fall in KDD's unit cost for the eight-year period ending in 1992. Because this efficiency gain was fully passed along to telephone users in the form of lower rates, the corresponding increment of consumer surplus was of significant size, equivalent to 25.6% of total international telephone call revenues in 1992. (JEL L95, O53)     

Informative advertising with spillover effects

This paper studies the effects of advertising in a Bertrand duopoly model, which extends Grossman and Shapiro (1984) by introducing the spillover advertising effect on top of the direct advertising effect. It is shown that the spillover effects would make the environment more monopolistic: higher prices and lower demand.     

A Characterization of the Dynamical System in a Two-sector Overlapping-generations Model: The Case of Unbounded Growth

This paper characterizes perfect-foresight equilibria in a two-sector overlapping-generations economy for the case of unbounded growth. The analysis demonstrates that gross substitutability in consumption is not sufficient to ensure the determinacy of equilibrium. Unlike Boldrin and Rustichini (1994), indeterminacy of equilibria can arise within the framework of an overlapping-generations model with convex technology. The finite time horizon of agents is the source of such indeterminacy.
JEL Classification Number: 041.     

AN EMPIRICAL EXAMINATION OF FINANCIAL LIBERALIZATION AND THE EFFICIENCY OF EMERGING MARKET STOCK PRICES

The efficient markets hypothesis in finance suggests that as equity markets are liberalized and made more open to the public, equity prices should reflect the increased availability of information and be more efficiently priced. In this paper, we examine whether emerging market equity prices have become more efficient after financial liberalization. Using two sets of financial liberalization dates, a battery of econometric tests, and data from sixteen countries and three composite portfolios, we find that in spite of theory suggesting the opposite, liberalization does not seem to have improved the efficiency of emerging markets. In fact, most of our statistical tests indicate that the markets were already efficient before the actual liberalization.     

The Contribution of Social Context to Participatory Planning Processes Within a Japanese Community

The concerns of diverse members in the community should be considered in the process of generating various alternatives. This requires a participatory process; a typical example being a small group discussion format such as a workshop. In small group discussions, understandability of participants’ opinions can be affected by the wording of their opinions. Our hypothesis in this study is, “The higher the similarity of wording between an expressed opinion and its wording in the media, the higher the likelihood of opinion adoption”. The hypothesis is examined and tested. In this study, we use the term “social acceptability” to denote the similarity of the wording of participants’ opinions with that used in media articles. To test this hypothesis, we proposed a methodology for evaluating the wording of a WS discussion and applied the methodology to the dialog data of two types discussions held in Ube, a Japanese city located in Yamaguchi Prefecture. Our analysis showed a positive correlation between social acceptability and adoption rate. To improve social acceptability, we suggest that a facilitator should frame the wording used by participants.     

Modeling the Role of a Coordinator as a Medium of Communication in 2-Player Conflicts

This paper discusses the role of a coordinator in the 2-player conflict where the information on players' preference is incomplete. It is assumed that the coordinator has a priori prospect of feasible alternatives. First, the method of the graph model for conflict resolution (GMCR) is extended to apply to this conflict with incomplete information, and the coordination system for the conflict with incomplete information is proposed. The process operated by the coordinator uses Extended Robustness Analysis that specifies the critical conditions for the stability and Pareto efficiency of an alternative. Finally, the methodology is applied to the conflict between hydropower generation and environmental interests.