Exchange rate volatility and MNCs' production and distribution networks

The case of Japanese manufacturing MNCs

Kozo Kiyota, Toshiyuki Matsuura, Shujiro Urata

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.

Original languageEnglish
Pages (from-to)523-538
Number of pages16
JournalSingapore Economic Review
Volume53
Issue number3
DOIs
Publication statusPublished - 2008

Fingerprint

Multinational corporations
Production networks
Distribution network
Exchange rate volatility
Manufacturing
Location choice
Exchange rates
Intra-firm trade

Keywords

  • Exchange rate volatility
  • Intra-firm trade
  • Location choice

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Exchange rate volatility and MNCs' production and distribution networks : The case of Japanese manufacturing MNCs. / Kiyota, Kozo; Matsuura, Toshiyuki; Urata, Shujiro.

In: Singapore Economic Review, Vol. 53, No. 3, 2008, p. 523-538.

Research output: Contribution to journalArticle

@article{34c8c2c5dfc34974a9e80203f8fd3c18,
title = "Exchange rate volatility and MNCs' production and distribution networks: The case of Japanese manufacturing MNCs",
abstract = "This paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.",
keywords = "Exchange rate volatility, Intra-firm trade, Location choice",
author = "Kozo Kiyota and Toshiyuki Matsuura and Shujiro Urata",
year = "2008",
doi = "10.1142/S0217590808003087",
language = "English",
volume = "53",
pages = "523--538",
journal = "Singapore Economic Review",
issn = "0217-5908",
publisher = "World Scientific Publishing Co. Pte Ltd",
number = "3",

}

TY - JOUR

T1 - Exchange rate volatility and MNCs' production and distribution networks

T2 - The case of Japanese manufacturing MNCs

AU - Kiyota, Kozo

AU - Matsuura, Toshiyuki

AU - Urata, Shujiro

PY - 2008

Y1 - 2008

N2 - This paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.

AB - This paper empirically examines the impacts of exchange rate volatility on the location choice by Japanese multinational corporations (MNCs) and their intra-firm trade. We use affiliate-level data for Japanese MNCs for 1995, 1998 and 2001. We found that high exchange rate volatility discourages the establishment of an affiliate by MNCs. Moreover, the high exchange rate volatility causes the shift from inter-firm to intra-firm transactions. These findings imply the importance of maintaining a stable exchange rate environment in order for MNCs to expand their production and distribution networks.

KW - Exchange rate volatility

KW - Intra-firm trade

KW - Location choice

UR - http://www.scopus.com/inward/record.url?scp=58149469959&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=58149469959&partnerID=8YFLogxK

U2 - 10.1142/S0217590808003087

DO - 10.1142/S0217590808003087

M3 - Article

VL - 53

SP - 523

EP - 538

JO - Singapore Economic Review

JF - Singapore Economic Review

SN - 0217-5908

IS - 3

ER -