Inbound Foreign Direct Investment in Japan: A Typology

Abstract

Foreign direct investment (FDI) has generated a wealth of research covering differentiated situations with an increasing interest for emerging economies. However, mature economies still account for a large share of worldwide inbound investment flows. Host countries’ local determinants, as well as investors’ motives for FDI can differ to a great extent. The case of Japan is rather significant, since the country has been attracting far less foreign investment than other mature economies, as reflected by dismal inbound FDI stock and flows respectively. The analysis of Japan’s particular domestic business context can offer insights into FDI decision-making taking into account these contrasted characteristics. Using a Delphi methodology, a qualitative approach relying on foreign direct investors’ and experts’ contributions, we propose a model of inbound FDI in Japan and identify four types of investors based on the nature of investments and market maturity. Empire builders, leveraging their established core co...