Abstract
Using a unique database on Japanese manufacturing plants in the United States, we examine for the first time the relationship between plant size and growth for foreign-owned affiliate plants. Japanese manufacturing affiliates are three times larger on average than comparable US plants and experienced 30% growth from 1987 through 1990. Despite this, our estimates strongly reject Gibrat’s Law for these plants and suggest 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.
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