Japan Project.

• Position: Brief Article

Members and guests of the NBER's Japan Project convened in Tokyo on December 15. Fumio Hayashi, NBER and University of Tokyo, and Anil K Kashyap, NBER and University of Chicago, organized the meeting. The program was:

Heather Berry and Mariko Sakakibara, University of California, Los Angeles, "Resource Accumulation and Overseas Expansion by Japanese Multinationals: An Empirical Analysis of the Internalization Theory"

Discussant: Kyoji Fukao, Hitotsubashi University

Discussant: David Weinstein, NBER and University of Michigan

Pinelopi K. Goldberg, NBER and Columbia University, and Michael M. Knetter, NBER and Dartmouth College, "International Rivalry in the Imaging Industry: Kodak v. Fuji"

Discussant: Naohiro Yashiro, Sophia University

Hiroshi Ono, Stockholm School of Economics, "Does Examination 'Hell' Pay Off? The Cost-Benefit Analysis of College Education in Japan"

Joe Peek, Boston College, and Eric S. Rosengren, Federal Reserve Bank of Boston, "Have Japanese Banking Problems Stifled Economic Growth?"

Discussant: Makoto Saito, Osaka University

Jun-Koo Kang, Michigan State University; Anil Shivdasani, University of North Carolina; and Takeshi Yamada, Hong Kong University of Science and Technology, "The Effect of Bank Relations on Investment Decisions: An Investigation of Japanese Takeover Bids"

Discussant: Takeo Hoshi, University of California, San Diego

Berry and Sakakibara explore the evolution of the value of multinationality to shareholders as a firm's level of international activity changes, and whether the accumulation of a firm's intangible assets actually precedes its investment abroad, as implied by the internalization theory. Using a sample of 141 Japanese manufacturing firms from 1974 to 1997, they find that shareholder valuation of foreign direct investment (FDI) changes as the level of a firm's international activity changes. Further, their finding that intangible assets Granger cause FDI supports the internalization theory.

Goldberg and Knetter use a variety of data sources to investigate whether and how competition in the consumer and commercial imaging business has changed in recent years. The main mechanism for identifying the degree of competition is fluctuations in real yen/dollar exchange rate, which generate changes in the relative cost of production between Kodak and Fuji. The authors find that Fuji has gained market power over time in the industry. Most indicators point to a corresponding decline in Kodak's market...