Deborah Swenson, University of California, Davis: By tracking the detailed product-level trade transactions for 929 Japanese affiliates in China, Ito, Matsuura, and Yang contribute to the classic literature that investigates the complementarity versus substitutability of trade and FDI. To advance this question, the paper studies the duration of intermediate input imports by these Chinese affiliates between 2000 and 2006. Because the authors have taken on the arduous task of creating a data set that combines four different sources, they illuminate a number of interesting relationships that are generally obscured by firm efforts to hide their proprietary actions from view.
The key question posed by this paper is: How is the duration of intermediate input import by Chinese affiliates shaped by product, firm-level, and national considerations? Thanks to the paper's careful data effort, much of the paper's novelty lies in its ability to relate this question to the Japanese parent firms’...