Market Access, Supplier Access, Agglomeration, and Location of Final and Intermediate Goods Production Sites for Japanese Automotive, Food, and Beverage MNFs in East Asia

In this chapter, an empirical analysis using the new economic geography (NEG) model will be conducted to examine the relationship between market access (MA), supplier access (SA), industrial agglomeration, and overseas location of final and intermediate goods production sites for Japanese automotive multinational firms (MNFs) in the processing and assembly industry and Japanese food and beverage MNFs in the lifestyle-related-type industry in East Asia. In doing so, first, we conducted the conditional logit estimation of location choice of Japanese automotive MNFs in East Asia countries including China (mainland), Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam after calculating the market access and supplier access data using the bilateral trade data from 1995 to 2009 in East Asia. From the estimated results, we found wage rate, infrastructure, and market access as demand factor and supplier access as supply factor and vertical and horizontal agglomerations, which show agglomeration economy, have affected FDI of final and intermediate goods production sites for Japanese MNFs in East Asia for 1995–2009. Furthermore, comparing the period 1995–2000 with the period 2001–2009 for final and intermediate goods production sites for Japanese automotive MNFs, we found that the sign condition for domestic SA for period 1995–2000 was negative, but the sign condition for domestic SA for period 2001–2009 was positive, because the supplier access to intermediate goods increases over time in East Asia for this period. In addition, the sign condition for neighboring countries SA for two periods was positive and these results were statistically significant. Second, we present an analysis of the determinants of overseas location choices of the Japanese agro-based food industry’s MNFs’ production sites in East Asia for 1985–2009 using the conditional logit model based on the NEG model. Especially, two periods—1985–1999 (weak agglomeration period) and 2000–2009 (strong agglomeration period)—were the focus of the degree of agglomeration of Japanese food MNFs in East Asia and the overseas locations of all-goods and final goods production sites. Finally, we analyzed the determinants of overseas location choices of the Japanese beverage MNFs’ production sites in East Asia over the 1995–2009 period using the conditional logit model based on the NEG model and obtained similar location factor results to those for Japanese food products.