Japanese FDI Research Articles

Institutional quality, the level of development and Japanese outward foreign direct investment

This paper studies the determinants of Japanese direct investment worldwide and in different country groups. We derive our research hypotheses from the Knowledge-Capital Model and test them empirically using the PPML model and statistical data for 179 target countries between 1995 and 2019. We examine the role of a host’s institutional quality in affecting the cost of FDI. We show that institutional quality matters in attracting Japanese FDI for developed, developing, and transitioning economies. We find the effect of institutional quality to be more pronounced in the latter group of countries, especially concerning industries characterized by high asset-specificity.

Does Japanese Manufacturing FDI in ASEAN5 Facilitate Trade?

manufacturing companies, but their expansion slowed in the early 2000s due to the rise of China. However, since the 2010s, amid tensions between Japan and China, as well as between the US and China, the ASEAN region has gained attention as an alternative destination. The paper analyzes the impact of changes in Japanese FDI in the manufacturing sector on trade between Japan and target countries. The analysis focuses on FDI in all 12 sectors of manufacturing in the five major ASEAN countries from 2007 to 2019 and estimates using gravity equations. Given the importance of distance variables in gravity equations, a random effects model is used for estimation. The results indicate that Japanese FDI in the transportation equipment, electronic equipment, and chemical and pharmaceutical industries had a positive correlation with trade with ASEAN5 countries, but no significant results were found in other sectors. Moreover, in transportation equipment and chemical and pharmaceutical industries, the import effect was greater than the export effect. With the Japanese government providing subsidies to manufacturing companies relocating production hubs to ASEAN from 2020 onwards, an increase in trade volume between these countries and Japan is expected in the future.

Prospects and Challenges of Japanese FDI in Bangladesh

Prospects and Challenges of Japanese FDI in Bangladesh

Foreign Investment in Vietnam: A Review of Corporate Compliance by Investors from Japan

Japan is one of the most significant foreign investors in Vietnam. However, information about trade compliance by Japanese firms in Vietnam remains scant. This study draws from a new survey of Vietnamese import and export enterprises in 2019, which includes both local and Japanese firms. It shows that Japanese firms are performing better than local firms in terms of trade compliance and regulation. They are also more likely to acknowledge the importance of public-private partnerships and the legal capacity of human force. However, the biggest concerns and obstacles of these actors are Vietnam’s specialized laws and regulations in the cross-border trade of goods. These findings offer important policy implications to enhance trade compliance for Vietnamese enterprises in general and Japanese FDI firms in particular. Authorized Economic Operator Program, Japanese FDI firms, Trade Compliance, Trade Facilitation, Vietnam

Implikasi Foreign Direct Investment Jepang melalui Toyota terhadap Perekonomian Indonesia Periode 2016-2022

This article focuses on cooperation between Japan and Indonesia through the development of a Toyota subsidiary in Indonesia as an instrument for Japanese Foreign Direct Investment. Japan is a country that has quite an important role in the international world because of its development in the economic sector, where currently Japan can dominate the international market through advances in automotive technology. The rapid development of the automotive industry has encouraged Japan to invest in Indonesia. This article aims to find out what the results of Indonesia-Japan FDI cooperation are through the development of Toyota in Indonesia in 2016-2022. In order to approach this problem, references to the theories of liberalism, bilateral cooperation and Foreign Direct Investment are used. Data was collected through secondary data as a data source, as well as using desk review and analyzed qualitatively. This study concludes that Japanese FDI through the Toyota company has enabled Indonesia to improve its economy through a high increase in the value of exports to several countries, expanding employment opportunities, as well as providing a positive impact on improving environmentally friendly technology.

Bangladesh’s Development Goals and Japanese FDI: Prospects and Challenges

Bangladesh’s Development Goals and Japanese FDI: Prospects and Challenges

Scale and development of foreign economic interaction between the USA and Japan in 2009–2021

The article analyzes the dynamics of economic cooperation between the US and Japan for the period 2009–2021: bilateral trade, export and import, FDI flows. Particular attention is paid to Japanese FDI and activities of Japanese manufacturing companies in the United States. Bilateral economic relations are a part of the broader context of economic integration in the Asia-Pacific, activities of multinational enterprises and their global production networks. A "triangular" model of trade relations has developed between Japan, China and the United States, with significant part of trade going through global value chains (GVCs). Over the past decade, the US foreign trade policy priorities have changed several times: from the attempt to create a free trade area in the Asia-Pacific under the Obama administration to President Trump’s protectionism and to more liberal economic agenda of the Biden administration. The role of Japan in the Trans-Pacific Partnership creation and reformatting after the US withdrawal is shown. The prerequisites for the progress of bilateral relations to a new stage of scientifi c, technical and economic cooperation in the context of confrontation between the USA and China are analyzed. President Biden’s economic policy priority in the Asia-Pacific is attracting allies to crucial technologies development and increasing global value chains sustainability. Japan is a key partner for the US to secure control over technology transfer, diversify supply sources and strengthen GVCs. Coordination of approaches to promoting economic security is an important priority for the renewed US-Japan alliance, so the two countries can reach a new level of cooperation.

Subsidiary staffing, location choice, and shareholder rights effectiveness

Institutional differences between countries influence strategic choices and performance of international businesses, but the unintended effects of legal institutions on firm legitimacy have received less attention. We argue that, while minority shareholder rights protection in an investment location does not directly protect shareholder interests abroad, the normative and mimetic effects it has on host country managers can mitigate agency problems. Using Japanese FDI established between 1986 and 2013 we find that (a) subsidiaries established in host countries with higher shareholder rights protection employ a smaller proportion of Japanese expatriates, (b) shareholder rights protection enhances a country’s FDI attractiveness, and (c) that the impacts of shareholder rights protection on expatriate ratio and location attractiveness are stronger when firm ownership is concentrated among exchange-listed firms. This research contributes to the literature on institutional difference in international business, in particular by highlighting the value of studying the imprinting effects of regulations.

Japanese ICT multinationals in Southern Europe by the end of the twentieth century: Fujitsu in Spain

This article is rooted in the endless debate of the relationship between FDI and multinational companies, which in turn connects with the controversy about economic growth and globalization. It deals with a global FDI’s fraction towards the end of the twentieth century—the Japanese FDI in Spain—and the reasons for the entry of the Japanese ICT multinationals into that southern European country. It addresses the company Fujitsu Espana creation and evolution and is based essentially on qualitative and quantitative sources of diverse provenance and nature. The research is structured in four main sections, which outline the general framework of Japanese foreign investment in Europe, and successively addresses the circumstances in the creation of Fujitsu Spain (1983), as well as the restructuring of this company in its organisational, labour and corporate issues.

Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging

In this paper we analyse the determinants of Japanese outward FDI stock for the period 1996–2017. This period is especially relevant as it covers a process of increasing economic globalization and two financial crises. To this aim, we consider a large set of candidate variables based on the theory as well as on previous empirical analysis. Our sample includes a total of 27 host countries. We select the covariates using a data-driven methodology, the Bayesian Model Averaging (BMA) analysis. Moreover, we also analyse whether these determinants change depending on the degree of development (emerging vs developed) or the geographical areas (EU vs East Asia) of the countries considered. We find that Japan's FDI can be explained by a wide variety of variables, that include not only the typical gravitational ones but also institutional and macroeconomic variables, including those that measure financial development. Moreover, Japanese FDI can be explained by both horizontal and vertical FDI motives in the groups of countries analysed. However, in developed, and more precisely, EU countries, horizontal FDI strategies are predominant, whereas for East Asian and emerging countries, there is more evidence in favour of vertical FDI.

The Present and Future Prospects of Japanese FDI in Hungary

Traditionally, the cornerstones of Hungary’s competitiveness in FDI attraction have been the favourable geographic location and the availability of a qualified and cost-effective labour pool. Western countries are still far the most important sources of the FDI stock in Hungary, however Japan is the second largest investor among Asian nations. Most of the Japanese FDI has been concentrated in the automotive sector and has targeted Western, Central and Northeast Hungary. Some Japanese investors have already started to locate high-end manufacturing technologies to Hungary which was in line with the country’s goal to be at the forefront of Industry 4.0. The main challenge on the Hungarian side is whether the country can ensure the necessary pool of talents and skilled labour to maintain its attractiveness and to move up in the value chain.

Impact of Foreign Exchange Administration Rule on the Nexus between Country-Specific FDI and Malaysian Currency

In the aftermath of the US Presidential election on 8 November 2016, the Malaysian currency Ringgit (MYR) had witnessed unprecedented volatility in its value relative to the USD. As a policy response, Bank Negara Malaysia (BNM) implemented a Supplemental Foreign Exchange Administration (SFEA) Rule in December 2016. Exporters are required to convert 75 per cent of foreign currency proceeds from the exports of goods into MYR with a licensed onshore bank. This study evaluates the impact of the new SFEA Rule on the relationship between country-specific FDI and MYR. Based on the data of five major inward FDI countries from 2015 to 2018, our results show: Firstly, Japanese FDI strengthens MYR in post-SFEA Rule; Secondly, FDI from Singapore is found to exert downward pressure on MYR; Thirdly, FDI from China, the Netherlands and the US are insignificant in influencing the MYR; Finally, inward FDI from different countries responds differently to the Rule. Notably, the results obtained are robust to different measures of the exchange rate. On policy suggestion, the Foreign Exchange Rule should also target non-export oriented inward FDIs to achieve the policy target. The result also highlights the importance of export-oriented FDIs for the long-run benefit of the Malaysian economy.

Japanese Foreign Direct Investment in the Visegrád Four: Trends, Characteristic and Driving Forces

Japan continues to be the most important Asian investor in Poland and Czechia, and the second most important player in Hungary and Slovakia (after South Korea). Japanese multinationals, operating in the automotive, electronics and other industries, as well as in certain services, play an important role in the Central and Eastern European economies, enhancing the performance of the respective V4 economies. Although compared to, for instance, German MNCs’ investment, Japanese MNCs represent a rather minor share in the total FDI stock of these countries, the number of companies increase year-on-year. The paper briefly presents the history and main trends of Japanese investment in the V4 region, maps out the main characteristics of Japanese investment flows, and identifies the driving forces of Japanese FDI within the V4 region. The last section of the paper also sheds light on a new opportunity for the V4 countries to attract more investment from Japanese companies, that is the Japanese companies’ possible relocation to the V4 region from the United Kingdom, as a result of Brexit.

Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity

October 01 2020 Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2020 by the Asian Economic Panel and the Massachusetts Institute of Technology2020Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2020) 19 (3): 109–110. https://doi.org/10.1162/asep_a_00791 Cite Icon Cite Permissions Share Icon Share Twitter LinkedIn Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity. Asian Economic Papers 2020; 19 (3): 109–110. doi: https://doi.org/10.1162/asep_a_00791 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu nav search search input Search input auto suggest search filter All ContentAll JournalsAsian Economic Papers Search Advanced Search Shigeyuki Abe, Kyoto University: One of the contributions of this paper is the creation of unique panel data by combining Chinese Custom Trade data, China's Annual Survey of Industrial Firms, Toyo Keizai's Overseas Japanese Companies, and Tokyo Stock Research data by identifying both parent and affiliated firms for seven years from 2000 to 2006. Adopting a discrete-time hazard model used by Hess and Persson (2012), the authors lead to a conclusion that firms in agglomerated regions with more foreign affiliates shorten its duration, while small and medium-sized (SME) firms import for a longer duration. My first comment is on the use of Toyo Keizai's Overseas Japanese Companies. These data provide the year of establishment of the FDI company. However, the paper does not use this establishment year data for further analysis. The behavior of FDI companies can depend on the year of establishment year, especially with regard to... You do not currently have access to this content.

Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity

October 01 2020 Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2020 by the Asian Economic Panel and the Massachusetts Institute of Technology2020Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2020) 19 (3): 107–108. https://doi.org/10.1162/asep_a_00790 Cite Icon Cite Permissions Share Icon Share Twitter LinkedIn Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity. Asian Economic Papers 2020; 19 (3): 107–108. doi: https://doi.org/10.1162/asep_a_00790 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu nav search search input Search input auto suggest search filter All ContentAll JournalsAsian Economic Papers Search Advanced Search Deborah Swenson, University of California, Davis: By tracking the detailed product-level trade transactions for 929 Japanese affiliates in China, Ito, Matsuura, and Yang contribute to the classic literature that investigates the complementarity versus substitutability of trade and FDI. To advance this question, the paper studies the duration of intermediate input imports by these Chinese affiliates between 2000 and 2006. Because the authors have taken on the arduous task of creating a data set that combines four different sources, they illuminate a number of interesting relationships that are generally obscured by firm efforts to hide their proprietary actions from view. The key question posed by this paper is: How is the duration of intermediate input import by Chinese affiliates shaped by product, firm-level, and national considerations? Thanks to the paper's careful data effort, much of the paper's novelty lies in its ability to relate this question to the Japanese parent firms’... You do not currently have access to this content.

Análisis de los principales determinantes de la aglomeración industrial: el caso de la IED japonesa automotriz en México

The current research analyses the agglomeration behavior of Japanese Foreign Direct Investment in Mexico’s automotive sector in the Bajio region. The study employs unpublished data obtained from Mexico’s Secretariat of Economy. The database is used to carry out the empirical analysis using spatial econometric techniques and test the presence of spatial dependence in the variables of the model. According to the results, Gross Domestic Product (GDP) per capita, labor force, transportation infrastructure, and geographical distance explain Japanese FDI agglomeration in Mexico’s Bajio region. The results also elucidate that economic similarities within entities may help attract investment in similar proportions to neighboring states. Additionally, positive spatial effects from Japanese FDI were found, suggesting that an increase in Japanese FDI in one state is followed by increments of Japanese investment in neighboring states. This may be evidence of horizontal cooperation and a result of Japanese firms taking advantage of scale economies and the development of specialized labor markets and suppliers in the Bajio region.

Networks of foreign affiliates: Evidence from Japanese micro‐data

AbstractThe paper provides evidence of the investment patterns of Japanese multinational enterprises (MNEs) across countries and industries and analyses the main drivers of their location strategies, using detailed micro‐data on Japanese parents and their affiliates including the final destination of affiliate sales. The breakdown of affiliate sales by destination market reveals that Japanese MNEs establish services affiliates primarily to maximise proximity to local customers, while foreign affiliates in manufacturing sectors tend to engage more widely with third countries. Yet, some economies emerge as strategic gateways to other destinations in their region. The empirical analysis delves into the drivers of host country attractiveness for FDI seeking new markets, production efficiency and to act as regional or global platforms. Important factors shaping Japanese FDI decisions include trade and investment policies in goods and services, deep FTAs, as well as streamlined customs procedures. Furthermore, well‐calibrated rules for digital commerce and investments in digital infrastructure and innovation contribute to attracting MNEs. Overall, the paper stresses the factors behind better integration into global production networks and the policy priorities to attract various types of FDI inflows.

The Determinations of East Asia’s Automobile Trade Using a Gravity Model

The aim of this study is to investigate empirically the factors that determine the level of automobile trade in East Asian countries by taking into account government policies as well as the role of MNEs. To do so, in this study we include dummies of import substitution industrialisation (ISI) and export orientation industrialisation (EOI) policies as well as Japanese FDI as additional explanatory variables in our augmented gravity models. We found that GDPs, distance, per capita income, FTA, government policies, language and FDI are the determinants for the development of automobile industry in each country in East Asia. In the case of auto P&C, apart from economic size, the role of government through trade policy (i.e., FTA) and industrial policies as well as the role of MNCs are the major contributors to the development both exports and imports of East Asian countries. In the case of final automobiles, the role of FTA and language seems to be unimportant. Nonetheless, the role of government policies and MNCs seem to be important.

The Effects of FDI Inflows on ASEAN Economic Growth

본 연구는 아세안 외국인직접투자 유입과 아세안의 경제성장에 어떠한 영향을 주었는지 고정효과모형을 이용하여 분석했다. 분석결과, 전체 외국인직접투자와, 역내 아세안 외국인직접투자, 동북아시아 3개 국가(한국, 중국, 일본)의 외국인직접투자 모두 아세안의 경제성장에 긍정적인 영향을 준 것으로 나타났다. 한국의 외국인직접투자는 제조업 분야에 48.8%로 높은 투자 비중을 보였으며, 이러한 투자는 아세안의 경제성장에 큰 영향을 준 것으로 보인다. 일본의 경우 마찬가지로 제조업 분야에 대해 높은 비중을 가지고 있었으나, 일본 기업의 경영특징으로 인해 외국인 직접투자로 인한 스필오버 효과가 일어나지 않아 그 영향이 한국에 비해 작게 나타난 것으로 보인다. 중국은 아세안의 자본을 장악하고 있는 화인(華人)기업들을 통한 효율적인 투자로 아세안의 경제성장에 긍정적인 영향을 준 것으로 보인다. 국내자본형성과 고용률, 개방도 또한 아세안의 경제성장에 긍정적인 영향을 준 것으로 나타났다. 실증분석 결과 중 고용율의 경제성장에 대한 계수가 국내자본형성보다 높은 것으로 나타났으며, 이는 아세안의 산업구조가 비교적 노동집약적이기 때문이라고 보인다.The present study investigated the effects of FDI inflows on ASEAN economic growth using fixed effect model. As a result, total FDI, intra-ASEAN FDI, and Northeast Asia countries (South Korea, China, Japan)’s FDI have positive effect on ASEAN economic growth. South Korea’s FDI concentrates on manufacturing sector, about 48.8% among all industry sectors. And it’s impact on ASEAN economic growth is the bigger than other countries. Japanese FDI also has huge amount on manufacturing sector. But because of their management style, it seems that there were no spillover effects of investment. In case of Chinese FDI, because of cooperation with ethnic-Chinese firms who have big part of ASEAN private capital makes Chinese FDI more efficient. Gross domestic savings, employment to population, and trade also increase ASEAN economic growth. Among empirical results, coefficients of employment to population are bigger than gross domestic savings. Thus, it seems ASEAN has relatively labor-intensive industry structure.

Atrakcyjność inwestycyjna specjalnych stref ekonomicznych na Dolnym Śląsku w Polsce dla japońskich BIZ

Atrakcyjność inwestycyjna specjalnych stref ekonomicznych na Dolnym Śląsku w Polsce dla japońskich BIZ