Abstract
The appreciation of the Japanese yen does not explain why Japanese firms have doubled foreign direct investment (FDI) in Southeast Asia since the late 2000s. This study investigates the effects of exchange rates and other factors on new Japanese FDI in Indonesia, Malaysia, the Philippines, and Thailand, using industry-specific panel data from 2008 to 2015. It is found that new FDI was more strongly correlated with the expectation of consumption demand than with exchange rate movements for Indonesia and Thailand, while the agglomeration of Japanese firms predominantly affected new FDI in Malaysia and the Philippines.
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