Sabbatical René Belderbos: Agglomeration and De-Agglomeration: (Foreign) Expansion and Divestmen

The title of the research I envisage to focus on during my sabbatical is Agglomeration and De-Agglomeration: (Foreign) Expansion and Divestment. It groups a number of research projects that I aim to pursue in collaboration with Japanese scholars. I have ample experience in research collaboration with Japan and earlier stays have led to a number of published papers. A number of projects started in more recent years have however not progressed sufficiently. A local presence is require to reinvigorate efforts and to access the research data. I have been offered an adjunct professor position at the Hitotsubashi Institute of Advanced Studies for 9 months (starting July 1, 2021) which will facilitate this. Hitotsubashi University is one of the top institutions in Japan where it concerns economics and business research and I have visited the university often in the past. Research will also draw on unpublished government micro-data in Japan through collaboration with RIETI. An affiliation in Japan as adjunct professor will facilitate my formal involvement in such collaborative projects and access to the micro data. A first project to pursue is entitled Agglomeration and Adverse Selection: Evidence from Multi-Plant Firms. It is joint work with Kyoji Fukao (formerly Hitotsubashi University and currently at the Institute of Developing Economies in Tokyo), Kenta Ikeuchi (Research institute of International Trade and Industry –RIETI), Young Gak Kim (Senshu University) and Hyeog Ug Kwon (Nihon University). In this project we make use of unpublished data (available at RIETI) from the manufacturing census and R&D surveys in Japan. We examine whether there is adverse selection of less productive firms in locations with industry agglomeration, and if sorting process depend on local competition. A second project has the working title De-Agglomeration abroad and Supplier-Buyers Linkages and is a collaboration with Toshiyuki Matsuura of Keio University in Tokyo. We started this project in 2018-2019 when professor Matsuura was visiting MSI at KU Leuven, but we have not been able to follow up on it. In this project we examine whether divestments abroad of leading Japanese multinational firms have a follow-on effect on divestments by Japanese supplier firms. A third project concerns a joint investment in a new data infrastructure on Japanese foreign direct investments to allow future research endeavors. It involves collaboration with Toshiyuki Matsuura, Shubin Wu (University of Liverpool) and Tony Tong (University of Colorado). Our plan is to construct an updated integrated database with yearly observations on Japanese subsidiaries abroad (more than 30000), financial data on parent firms, and macroeconomic data on host countries, 1989-2018. The construction of this dataset will support several lines of new research. For instance, our prior work has examined incremental (small scale) investments by Japanese firms in uncertain macro environments as a strategy to create growth options, and recent data would allow us to examine the conditions under which these options are executed when there is resolution to such uncertainty. Another line of research would combine these data with my current projects on global cities as innovation hubs, and examine the role of global cities in Japanese firms’ subsidiary expansion (and divestment) strategies and the connection with firms’ technological capabilities (patents).