Foreign Direct Investment In Japan Research Articles

Impact of International Investment Agreements on Japanese FDI: A firm‐level analysis†

AbstractIn this study, we examine the impact of Japan's International Investment Agreements (IIAs) on the locational choice of Japanese firms' foreign direct investment (FDI) by considering the quality of IIAs. We estimate the conditional logit model covering 12,435 FDI cases by 3838 Japanese companies in 92 host countries, 16 manufacturing sectors and 12 non‐manufacturing sectors from 2000 to 2019. We found that the presence of IIAs, particularly comprehensive and high‐level ones, has a positive impact on Japan's FDI. On the contrary, the past incidence of investor–state disputes has a negative impact. These effects are found to be particularly strong for FDI by small‐ and medium‐sized enterprises. High regulatory quality is found to attract FDI, whereas the positive impact of IIAs in attracting FDI is strong in a country with a low regulatory quality.

Potential for inward foreign direct investment in Japan

Promotion of inward foreign direct investment (FDI) into Japan has been an important policy in the Abenomics growth strategy. This paper examines if we observe positive impacts of the policy in the data. We first estimate a gravity model of bilateral FDIs using data for 35 OECD countries as destination countries. In estimating the model, we handle zero values for FDI stock explicitly. The model includes (origin and destination) country-specific effects as well as destination-country specific time trends. We take the model prediction as a reasonable counterfactual and compare that to the actual inward FDI stock for Japan. Although the actual inward FDI stock has been growing and is likely to achieve the goal of 35 trillion yen by 2020, the growth under the Abe administration has been comparable to or slightly lower than the counterfactual suggested by the estimated model. We also estimate the model without Japan as a destination country and use the estimated model to calculate the counterfactual level of Japan's inward FDI. Although we expect the gap between the counterfactual and the actual become narrower if Abenomics policy has been successful, we fail to find that. These results cast a doubt on the effectiveness of the Abenomics policies to encourage inward FDI at least as of 2015.

Migrant and business network effects on intellectual property trade: Evidence from Japan

This study examines how international migration and business networks affect revenue from intellectual property trade using data on Japan’s bilateral trade flows. The analysis is distinct as it integrates past studies on two globalization-related topics: trade and migration relationships, and trade and foreign direct investment (FDI) relationships. Our analysis shows that revenue from intellectual property trade relates positively to the number of immigrants residing in Japan; however, it does not have any relationship with FDI in Japan and Japanese direct investments overseas. Additionally, revenue relates negatively to the number of Japanese emigrants living in less developed countries/areas.

Japan's Foreign Direct Investment in Services in Asean

Japan's Foreign Direct Investment in Services in Asean

Inbound foreign direct investment in Japan: A typology

While Japan has been attracting far less foreign investment than other mature economies, it could offer insights into FDI decision-making for international firms entering countries with a shrinking domestic market and increased international competition. Using a Delphi methodology with contributions from foreign direct investors and experts, we propose a model of inbound FDI in Japan and identify four types of investors based on the nature of investments and market maturity, namely empire builders, rescuers, niche players, and cherry-pickers. This framework, offering both descriptive and prescriptive components, highlights the importance of the predisposition and motives of local takeover targets and business partners in foreign market entry decisions. This model can help foreign firms take advantage of investment opportunities in Japan, and provide lessons for market entry in other mature economies facing similar conditions.

Examination of the Singapore Shift in Japan's Foreign Direct Investment in Services in ASEAN

i»?Asia is fast becoming the largest recipient of Japan's foreign direct investment (FDI). Within the Asian region, the Association of Southeast Asian Nations (ASEAN) has been the major investment destination of Japan. In the manufacturing sectors, however, the investment flows from Japan to ASEAN—with Thailand being the largest recipient—has been declining. In contrast, Japan’s FDI in the services sectors in ASEAN has been growing rapidly. The recent phenomenon of the Singapore Shift in Japan's FDI in the ASEAN services sectors proves interesting. The prominent strategy of Japanese companies is to establish a commercial presence in Singapore, which they expect to be the “hub” of Southeast Asia, thereby enabling them to supply services to the entire ASEAN region. The magnitude of the Singapore Shift varies for every services sub-sector. By comparing transport and logistics with finance and insurance industries, this paper considers the critical determinants of the Singapore Shift.

Inbound Foreign Direct Investment in Japan: A Typology

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...

How to conduct business with the Japanese: case study of inward FDI in Japan

For economic re-vitalization, the Japanese economy is required to attract more inward foreign direct investment (FDI), which brings new technologies and know-how, promotes competition, and raises employment. The Japan Team conducted in-depth interviews in five firms from ASEAN and South Asia. Questions were asked regarding years since the the Japan office was established, how they started the business in Japan, business objectives, competitiveness, public support they received, and problems they face. Since Japan was the second largest market in the world, they targeted the Japanese market to enter. Even if the firms were small, they had clear global strategies about where to invest. These companies had competitiveness to conduct business in Japan, in particular to satisfy the high level of quality. The problems they face in Japan are related to traditional Japanese business practices such as long-term relationships among Japanese industrial groups. Japanese firms had already established strong and closed business ties, and it is difficult for foreign firms to enter, even if they have better technology. To invest in Japan, JETRO and other organizations supported them under the ‘Invest Japan’ programme. Although the firms interviewed acknowledged the merit of these supports, more information on know-how regarding conducting business with Japanese firms is desired.

Restrictions Relating to Investment in Entities Holding Infrastructure in Japan

On May 17, 2010, the Growth Strategy Meeting set up in the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) issued a report on growth strategy (“GSM Report”). The GSM Report recommends as a basic principle the creation of a new market environment consisting of the following pillars: (i) intensive allocation of public investment according to costeffectiveness; (ii) relaxation of regulation, and facilitation of private sector proposals and bold management; (iii) active use of private sector’s wisdom and fund through public-private partnership (PPP) and private fund; and (iv) cooperation with private sector and promotion of talent. With regard to an international operation and cooperation with private sector, the GSM Report recommends: (a) formation of infrastructure fund; and (b) use of PPP and Private Finance Initiative (PFI). The infrastructure mentioned in the GSM Report includes airport infrastructure, port infrastructure, highway infrastructure, railway infrastructure, and sewage infrastructure. The measures for facilitation of PPP and PFI mentioned in the GSM Report includes introduction of concession method in infrastructure sector, privatization of government-affiliated corporation, improvement of tax for promotion of PFI, and measures allowing the participant to sell to a third party its shares in special purpose vehicle used in the PPP and PFI. On June 1, 2010, the Ministry of Economy, Trade and Industry (METI) released a report on the Industry Structure Vision 2010, which recommends for improvement of industrial finance such measures as improvement of tax for foreign fund and tax exemption or corporate bond interest. We here review environment on foreign direct investment in Japan and investment in infrastructure.

Foreign Direct Investment in Japan: Multinationals' Role in Growth and Globalization. By Ralph Paprzycki and Kyoji Fukao. Cambridge: Cambridge University Press, 2008. x, 274 pp. $80.00 (cloth).

Foreign Direct Investment in Japan: Multinationals' Role in Growth and Globalization. By Ralph Paprzycki and Kyoji Fukao. Cambridge: Cambridge University Press, 2008. x, 274 pp. $80.00 (cloth).

Assessing foreign direct investment relationships between China, Japan, and the United States

China has received enormous inflows of foreign direct investment (FDI) in recent years, including significant flows from Japan and the US. We examine these investment flows in detail to gain perspectives on their relative importance for the three countries involved. We also analyze the industrial composition of FDI flows over time. American FDI flows to China have been less concentrated in manufacturing than average for investors in China while Japan's FDI flows have been much more concentrated in manufacturing, particularly in transport, electrical and machinery industries in recent years. Using survey data from American and Japanese affiliates, we compare the employment patterns and sales destinations of American and Japanese affiliates in China. We find a much higher degree of export-orientation for Japanese affiliates than American affiliates, with the latter tending to make the vast majority of their sales in the Chinese market. Over time, however, we find a tendency towards convergence in the sales destinations of Japanese and American affiliates.

Pollution export as state and corporate strategy: Japan in the 1970s

ABSTRACT Most economists examining the question of ‘pollution havens’ have concluded that the level of environmental regulation and activism in different states is not generally a significant determinant of international patterns of trade and foreign direct investment. This paper argues on the basis of extensive primary research that with respect to Japan's foreign direct investment during the 1970s, at any rate, this conclusion needs to be rethought. In the early 1970s, Japanese actors were remarkably forthright in ascribing their investment decisions to a desire to move polluting industry overseas. These statements allow us to examine ‘pollution export’ as a state strategy, a project advocated by industry organizations, and a response of individual firms to high levels of protest and regulation. The paper also traces the development of the Japanese debate over pollution export through the 1970s.

A Study on Foreign Direct Investment in Japan -on the basis of the causes for its increase and future projects-

A Study on Foreign Direct Investment in Japan -on the basis of the causes for its increase and future projects-

Economic analysis and policy trends of foreign direct investment in Japan

Economic analysis and policy trends of foreign direct investment in Japan

Foreign direct investment in Japan: multinationals' role in growth and globalization

1. Introduction 2. The extent and history of foreign direct investment in Japan 3. The surge in inward FDI 4. Japan's economic growth and foreign direct investment 5. The performance of foreign firms and the macroeconomic impact of FDI 6. The impact of foreign direct investment in Japan: case studies of the automobile, finance, and health care industries 7. The prospects for foreign direct investment in Japan 8. Conclusion.

Changing Competitiveness of Japanese Firms and Role of Japan's FDI

The origin of Japanese firms’ international competitiveness is in the system of minimising ‘the sum of production costs and transaction costs’ in the procurements of ‘specialty’ parts. Japan’s location advantages are indispensable factors for Japanese firms to achieve the cost minimisation. Furthermore, existence of global demand for ‘specialty ’ products has strongly supported the ownership advantages of Japanese automobile industry. However, recent ‘ICT revolution’ has caused accelerated ‘commoditisation’ of ‘specialty’ products, especially, in ICT and electronics industries. This ‘commoditisation’ undermined Japanese firms’ competitiveness in ICT and electronics industries. Japanese firms in the industries have to concentrate more on development of new products, instead of effective production. The Japanese electronics and ICT firms are facing several dilemmas, which need to be resolved. I. The Background and the Issue After the low growth age of Japanese economy (so-called ‘Japan’s lost decade’ with about 1 per cent growth or less per year) in the 1990s and beginning of 21 century, it seems that finally Japanese economy has turned to an upward direction of 2.5 per cent growth or more per year in recent years. However, is it true that Japanese firms have actually strengthened and recovered their competitiveness in some major industries, especially in ICT (information communication technology) industries? In this article, I focus on the international competitiveness of some types of Japanese firms, which were considerably damaged by the ‘ICT revolution’ and that of other types of Japanese firms, which were maintained and strengthened even in that situation. Demand side as well as supply side will be examined in the analysis of Japanese firms’ competitiveness. In the Section II, I briefly describe the recent trend of Japan’s international trade and foreign direct investment (FDI) and changing competitiveness of Japanese firms. In the Section III, I try to clarify that the origin of Japanese firms’ international competitiveness is a system to minimise ‘the sum of production cost and transaction cost’. The Section IV is an argument on the severe influence of ‘ICT revolution’ on Japanese firms’ international competitiveness, which is based on the ‘minimisation of production cost and transaction cost’. The effects on demand side are also analysed in this section. The Section V is regarding a possible solution to recover the international competitiveness of Japanese firms through foreign direct investment (FDI). Overseas business activity is one good solution to recover the competitiveness of Japanese firms in damaged ARTICLES / 5 The author is Professor, Nishogakusha University, Tokyo, Japan. 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 123456789012345678901234567890121234567890123456789012345678901212345678901234567890123456789012123456789012 89 Changing Competitiveness of Japanese Firms and Role of Japan’s FDI • SHIGEKI TEJIMA industries. In fact, it is a big chance for Japanese firms. However, it is also a big challenge for Japanese firms because characteristics of markets of intermediate goods and labour in foreign countries were not necessarily advantageous for Japanese firms. How to solve this issue of location ‘disadvantages’ is another big task for Japanese firms. Finally, the Section VI is the conclusion. II. A Recent Trend of Japan’s International Trade and Foreign Direct Investment (FDI) A Recent Trend of Japan’s International Trade When we see the recent trend of Japan’s international trade, it is noteworthy that Japan’s export has steadily grown and Japan preserved a high level of trade surplus while Japan’s import has also rapidly increased even in the period of so called ‘Japan’s lost decade (or low growth age)’ of the 1990s (Figure 1). Figure 1 Japan’s Export and Import Source: Compiled by the author from Japan’s MoF (Ministry of Finance) data. It seems that, generally speaking, Japanese companies have still maintained export competitiveness internationally although some of them were obliged to implement severe restructuring of their management, especially, in electronics and ICT industries. 70000000000

The Extent and History of Foreign Direct Investment in Japan

The past few decades have seen a significant rise in foreign direct investment(FDI) worldwide. While Japanese companies have actively contributed to this trend, FDI in Japan continues to be much lower than in other countries. This paper explores the history of both outward and inward FDI in Japan, looking in particular at the reasons for the low levels of inward FDI. New calculations for this paper - based on data from the Establishment and Enterprise Census - show that foreign firms' role in the Japanese economy may be substantially larger than the most frequently cited published statistics suggest. In some industries (motor vehicles and electrical machinery in particular), inward FDI penetration, as measured by the share of employment accounted for by foreign affiliates, in Japan in fact is on par with the United States. However, a large number of sanctuaries with almost no foreign involvement remain, so that FDI penetration overall is still very low. While to some extent, this can be explained by Japan's relatively isolated geographic location, historical factors play an important role. Throughout the centuries and until quite recently, Japan's rulers have viewed foreign involvement in the economy as a threat and consequently erected various barriers to FDI, which are discussed in detail.

The Impact of Foreign Direct Investment in Japan: Case Studies of the Automobile, Finance, and Health Care Industries

Having historically received very little foreign direct investment, Japan has experienced a substantial increase in such inflows in recent years. This paper analyzes the impact of the growing presence of foreign firms on the Japanese economy through detailed case studies on the automobile, finance, and health care industries. The wholesale & retail and the telecommunications sector are also briefly examined. The case studies show that in the sectors considered, foreign firms in one way or another are contributing to a greater degree of competition, are exposing domestic firms to global best practice, and are increasing the range of products and services available in Japan. In many of the sectors, they are also contributing to changes in industry structure and employment practices. The case studies thus illustrate that foreign direct investment - even at its present levels, which, although large by Japanese standards, are still low in international comparison - can be an important catalyst for change and hence help to reinvigorate the Japanese economy.

Exchange Rate, Exchange Rate Volatility and Foreign Direct Investment

In the light of the importance of foreign direct investment (FDI) for the promotion of economic development, this paper examines the impact of the changes in the real exchange rate and its volatility on FDI. Examining Japan's FDI by industries, we found that the depreciation of the currency of the host country attracted FDI, while the high volatility of the exchange rate discouraged FDI. Our results suggest the need to avoid over‐valuation of the exchange rate and to maintain stable but flexible exchange rate in order to attract FDI.

Determinants of Japan's foreign direct investment: An industry and country panel study, 1984–1998

From the time of the Plaza Accord until the late-1990s, Japanese foreign direct investment (JFDI) successively rose dramatically, fell sharply and recovered slowly. Using panel data for 8 manufacturing industries and 15 countries, we find that JFDI was primarily affected by domestic macroeconomic conditions and the increasing use of antidumping investigations by host countries. In addition, we find that the precise relationship between exports and JFDI depends on the industry and country in question. Finally, there is a robust positive relationship between imports and JFDI. While this may result from stable intra-keiretsu relationships, it may also be, in part, that JFDI represents the outsourcing of relatively low technology production processes. J. Japanese Int. Economies 18 (2) (2004) 161–182.