Journal of Urban Economics· 2026Q1
JUE insight: Soft infrastructure and the location choice of multinational firms: Evidence from Japanese investment in the United States in the 1980s
- 1citations
- Q1SCImago
- 2026year
Short summary
Japanese firms investing in the US in the 1980s were 25% more likely to choose locations with existing Japanese Studies programs, indicating 'soft infrastructure' like culture-specific human capital pipelines influences FDI.
AI-generated from the title and abstract; the full text is not read.
Key points
- Japanese foreign direct investment (FDI) in the US during the 1980s was analyzed to understand location determinants.
- Commuting zones with Japanese Studies programs in 1975 were 25% more likely to receive Japanese investment in 1992.
- This effect persisted when controlling for traditional FDI determinants such as Japanese population, manufacturing, agglomeration, and market access.
- The findings highlight 'soft infrastructure,' defined as culture-specific human capital pipelines, as a key factor in attracting FDI.
AI-generated from the title and abstract; the full text is not read.
Abstract
We examine whether culture-specific educational infrastructure influenced the location decisions of multinational enterprises by analyzing Japanese foreign direct investment (FDI) in the United States over the 1980s. Using the expansion of Japanese FDI following Reagan-era trade tensions, we test whether preexisting Japanese Studies programs at U.S. universities predict subsequent Japanese investment across 722 commuting zones. We find that zones with Japanese Studies programs in 1975 were approximately 25 percentage points more likely to receive Japanese investment in 1992, controlling for traditional determinants like Japanese population, manufacturing infrastructure, agglomeration, and market access. The results are robust to alternative empirical methods, including the instrumental variable approach. Our results suggest that “soft infrastructure”—culture-specific human capital pipelines—represents an overlooked location advantage in attracting FDI.
The authors' abstract, as published at the source. Journal of Urban Economics, 2026 · DOI ↗
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Field: Economics and Econometrics
Economics and EconometricsEconomics, Econometrics and Finance