This paper examines how internationalization impacts firm performance, with a focus on exporting and domestic innovation. Japanese firms have actively engaged in importing, exporting, and expanding overseas production for decades. Although the manufacturing sector has seen overall productivity gains due to internationalization, this internationalization has not significantly boosted domestic production and exports. The paper suggests that weak connections between internationalization and innovation might be a factor. By analyzing previous studies, it emphasizes the importance of learning from international partners to boost domestic innovation and outlines research questions on fostering a robust virtuous cycle between internationalization and innovation.

JEL classification:F14;F23;L25;O31;O33

　　Intellectual Property Rights (IPR) protection is widely regarded as an important factor in technology transfer. This study empirically examines the effect of effective patent enforcement on technology transfer between US parent firms and their majority-owned overseas affiliates over the period of 1999-2005. It is found the improvement of IPR protection encourages internal technology transfer among multinationals, especially for middle-income countries. Then, in patent-intensive industries, strengthening patent enforcement level also has a significant positive impact on technology transfer within multinational firms. The conclusions reveal the impact of IPR policy on intra-firm technology transfer varies across two dimensions:host market and industry. JEL Classification:C23, F23, O34

　　The existing literature has noted the negative effects of intellectual property protection (IPP) on trade volume when the market power effect dominates the market expansion effect. Given that both effects increase profits, IPP may induce entry without ambiguity. However, using product-level entry data for large pharmaceutical firms, we find that IPP has a negative impact on market entry. This suggests that IPP does not simply present companies with profitable opportunities. As IPP may influence firm entry strategy, we further investigate the mode of entry, whether internal (e.g., export or direct investment) or external (e.g., licensing or strategic alliances). The results indicate that internal supply is negatively related to IPP, whereas IPP positively affects external supply. This implies that firms facing infringement risk, fierce market competition, or a developed technology market in stringent IPP countries often rely on the external channel as their mode of entry.

JEL Classification Numbers:F14, O34, L24.

　　This study analyzes the impact of bilateral free trade agreements (FTAs) on the decision-making of multinational enterprises from a third country. Specifically, we analyze how Japanese overseas affiliates located in the European Union (EU) changed their investment behavior in response to the EU-Korea bilateral FTA concluded in 2011. By applying unique Japanese data at the affiliate level, we estimate how the EU-Korea FTA affects the performance of Japanese firms operating in the EU. To mitigate the endogeneity problem due to self-selection into the region, we employ a difference-in-differences method and compare the performance variation of Japanese affiliates located in the EU with that of affiliates outside the EU, after controlling for firm and regional characteristics. We find that the EU-Korea FTA reduces the amount of foreign direct investment (FDI) made by Japanese affiliates within the EU. Furthermore, we explore industry heterogeneity and find that industries in which Japanese and Korean firms compete the most have Japanese affiliates more prone to be negatively affected by such external shocks. The study reveals that the indirect impact of an FTA on third-party FDI can be substantial.

JEL classification:D22;D24;F21;F23