The Decline of Japan in Asia—an Update

Abstract

Abstract This paper focuses on relative levels of investment and trade between Japan and East Asia in the 1990s. Although Japan has been devoting a higher proportion of its world wide investments to this region, the value of this investment has been falling absolutely and even more so relative to the size of inflows from other sources. The region is more important for the trade of Japan than is Japan for the trade of the region. While trade between Japan and China has become more important recently for the latter. Japan's contribution to the trade of the rest of the region has largely stagnated. For both FDI and trade intra regional flows are now larger than are flows between the region and Japan. Evidence that Japan dominates the region through supply of machinery or through coordinating regional production networks is not convincing. The paper concludes that Japanese hegemony over the region is neither actual nor imminent.