Empirical analysis and policy implications of the patterns and structure of japanese direct investment in the united states

Abstract

Japan's rapid transformation into a mature industrial economy and its growing role in the international economy have generated a great deal of interest among analysts and policymakers, particularly in terms of Japan's trade and investment relations with the United States. This article provides an empirical analysis and policy implications of the Japanese direct investment in the manufacturing sector in the United States. We find that both industrial organization and the cost of capital considerations have been the proximate causes for the surge in such investments.