Blonigen, Bruce and KaSaundra Tomlin

"Size and growth of Japanese plants in the United States"

JEL codes: F23; L11
Keywords: Foreign Direct Investment; plant size and growth

Abstract: Using a unique database on all Japanese manufacturing plants in the United States, we examine the first relationship between plant size and growth for these foreign-owned plants. Japanes nanufacturing affiliates are three times larger on average than comparable U.S. plants and experienced 30 percent growth from 1987 through 1990. Despite this, our estimates strongly reject Gibrat's law for these plants and suggest that smaller plants grow faster. We also find  younger plants grow quicker and previous investments by the parent firm mean slower growth, particularly for automobile-related plants. Both are consistent with inexperienced firms growing faster as they learn.