Kiyoshi Kojima

Bio: Kiyoshi Kojima is an academic researcher from Hitotsubashi University. The author has contributed to research in topics: Foreign direct investment & Economic integration. The author has an hindex of 17, co-authored 44 publications receiving 1555 citations. Previous affiliations of Kiyoshi Kojima include International Christian University.

International Trade and Foreign Investment : Substitutes or Complements

Abstract: Recently, there has been some discussion on whether foreign investment "substitutes" for or "complements" mternatronal trade First as will be briefly reviewed in Section II, Robert Mundelll showed that both are complete substitutes for each other under the assumption of identical production functions for two countries within the framework of ordinary Heckscher-Ohlin-Samuelson theory of trade. Second, Andrew Schmitz and Peter Helmberger2 and especially Douglas D. Purvis3 demonstrated that foreign investment may work complementarily to international trade if production functions vary in the two countries (Section 111). However, these people seem not to be able to show definite conditions for substitute or complementary cases. Mundell and Purvis dealt with international movements of capital as one of the homogeneous factors of production, referring to it as a real, or physical capital.4 1 would like in this paper to call it "money capital" for it is to be a general, homogeneous factor of production which is allocable and reallocable to any sector of the economy. It is money capital before allocated while it becomes real capital after allocated.5 Schmitz and Helmberger had in mind foreign direct investment but dealt with it as if there were no difference from money capital movement. But, there is a critical difference, among others, in the sense that the foreign direct investment affects the activities of specific sectors of investing and host economies, whereas international money capital movement is absorbed by and results in the reallocation of factors of production (capital and labor) so as to attain a general equilibrium of both countries. Keeping in mind this characteristic of foreign direct investment, we may be able to differentiate succinctly two cases in which foreign direct investment works as a complement to international trade (trade-creating type) or as a substitute for it (trade-destroying type). This is the main purpose of the present paper (Section IV).

The Pattern of International Trade Among Advanced Countries

Abstract: Recent studies on international trade, especially by the United Nations and GATT, disclose two significant trends in trade since World War 11 : a rapidly increasing trade among advanced industrial countries and a stagnating trade between advanced industrial countries and underdeveloped non-industrial countries.1 Although both trade tendencies merit further investigation, this paper focuses on the increasing trade among advanqed countries in order to enable a more rigorous analysis on the kinds of commodities which have influenced the

Micro- and Macro-Economic Models of Direct Foreign Investment : Toward a Synthesis

Abstract: At the moment the theories of direct foreign investment (DFl) are of two major types: one is microeconomic-theoretic, the other macroeconomic-theoretic. The microeconomictheoretic approach, which currently dominates the literature on multinational corporations, is exemplified by the industrial-organization theory [Hymer (1960), Kindleberger (1969), Caves (1971)], the product-cycle theory tVernon (1966)], the appropriability theory [Magee (1977)], the risk-diversification theory [Grubel (1968), Agmon and Lessard (1977), Rugman (1979)], the intermediate-market-internalization theory [Buckley and Casson (1976), Casson (1979), Rugman (1980)] and the eclectic theory [Dunning (1977, 198la)]. On the other hand, the macroeconomic-theoretic approach is represented by the currency-premium theory [Aliber (1970)], the development-stage theory [Dunning (198lb)], and the dynamic comparative-advantage theory [Kojima (]973, 1975)],1 The first two macro-theoretic models look at macroeconomic variables or phenomena but are not concerned with the issue of how multinational investment activities affect the national welfare of the home and host countries. The Kojima model is the only one so far that has addressed the question of the impact of DFI on national welfare. For that matter, all the micro-theoretic models are concerned only with private cost and benefit analysis and are totally oblivious of social costs and benefits. The compatibility issue between the private and social benefits of DFI is intrinsically a knotty one, for in many instances they are diametrically opposed to each other and cannot easily be reconciled. In the first place, multinational corporations by definition operate globally, while the nation, to which a criterion of social interest applies, has a much more limited arena of jurisdiction. Second, some factors of production are by nature immobile internationally, while others are made highly mobile internationally through the medium of multinational corporations, thereby enjoying a much higher degree of freedom in maximizing their returns. This difference in mobility inevitably affects the national income distribution

The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions

Abstract: This article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade, and restates its main tenets. The second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains “a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to MNE activity as well.”

Toward an Eclectic Theory of International Production: Some Empirical Tests

Abstract: This paper first sets out the main features of the eclectic theory of international production and then seeks to evaluate its significance of ownership- and location-specific variables in explaining the industrial pattern and geographical distribution of the sales of U.S. affiliates in fourteen manufacturing industries in seven countries in 1970.

Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach

Abstract: The main task of this paper is to discuss ways in which production financed by foreign direct investment, that is, that undertaken by multinational enterprises (MNEs), has affected our thinking about the international allocation of resources and the exchange of goods and services between countries. The analysis takes, as its starting point, the growing convergence between the theories of international trade and production, and argues the case for an integrated approach to international economic involvement, based both on the location-specific endowments of countries and the ownership-specific endowments of enterprises. In pursuing this approach, the paper sets out a systemic explanation of the foreign activities of enterprises, in terms of their ability to internalise markets to their advantage. It concludes with a brief examination of some of the effects which the MNE is allegedly having on the spatial allocation of resources, and on the patterns of trade between countries.

Explaining the international direct investment position of countries: Towards a dynamic or developmental approach

Abstract: This chapter explores the proposition that a country’s international direct investment position, and changes in that position, may be usefully explained by the eclectic theory of international production. Using data on the direct investment flows (or changes in the direct capital stock) of some 67 countries, over the period 1967–78, it also suggests that there is a systematic relationship between the determinants of those flows and the stage and structure of a country’s economic development.