Networked FDI: Sales and sourcing patterns of Japanese foreign affiliates

Using firm-level data on the sales and sourcing patterns of Japanese affiliates, this paper suggests that very little foreign direct investment (FDI) falls neatly into the standard bins of horizontal, vertical and export-platform FDI. Most affiliates import some intermediates and export some output, suggesting a pattern that might be called "networked FDI." This suggests that the nature of FDI is influenced by "regional comparative advantage," i.e., the proximity of markets and suppliers.