Japan 20: The West 1 Reversing the Scorecard

Abstract

The trade imbalance between Japan and its Western partners may be a source of concern, but much more serious is the even far greater investment imbalance. While Japanese direct investments have poured into the North American and European markets, American and European investments in Japan are paltry: the current ratio of investment flows is running at 20 to 1, in some cases much more, in Japan's favour. As the strategic issues for Western companies in establishing a “robust presence” in Japan are fundamental and critical, the trade and investment deficits are partly caused and further exacerbated by the “knowledge‐gap” between the two. Reversing the scorecard must be the most urgent imperative for Western corporations and governments, though the effort required will be very substantial indeed.