Foreign Direct Investment in Japan: Multinationals' Role in Growth and Globalization

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Contents......Page 7
List of Figures and Tables......Page 9
Acknowledgments......Page 11
ONE Introduction......Page 13
Outline......Page 16
What is Foreign Direct Investment? – Concepts, Definitions, and Data Sources......Page 23
TWO The Extent and History of Foreign Direct Investment in Japan......Page 29
Global FDI Trends and Japan’s Outward Investment......Page 30
The Extent and Nature of FDI in Japan......Page 35
Why Is FDI in Japan So Low?......Page 44
From the Origins to the End of the Tokugawa Shogunate (Twelfth Century to 1867)......Page 47
TheMeiji Era to the End ofWorldWar II (1868–1945)......Page 48
The High-Speed Growth Era (1945–1970)......Page 49
The 1970s to theMid-1990s......Page 51
The Mid-1990s to the Present......Page 57
Foreign Firms’ Role in the Japanese Economy Before the 1990s......Page 61
Conclusion......Page 67
THREE The Surge in Inward Foreign Direct Investment......Page 68
The Boom in Inward FDI......Page 69
International Factors Behind the Surge in Inward FDI......Page 71
Domestic Factors......Page 73
Deregulation in the Service Sector......Page 74
Unwinding of Cross-Shareholdings......Page 75
Changes in Accounting Rules andMeasures to FacilitateMergers and Corporate Restructuring......Page 78
Falling Costs andWeak Companies......Page 79
Changing Attitudes Toward Foreign Companies......Page 81
LaborMarket Changes......Page 83
Aggregate FDI Flows......Page 85
Sectoral Trends......Page 87
Investment Dynamics and the Business Environment......Page 88
Most Recent Trends......Page 94
Conclusion......Page 95
FOUR Japan’s Economic Growth and Foreign Direct Investment......Page 96
Labor Input and Human Capital Accumulation......Page 99
Private Investment and the Excess Savings Problem......Page 102
TFP and Its Importance for Future Growth......Page 106
Accounting for Japan’s Growth......Page 107
Explaining Japan’s TFP Performance......Page 110
Sectoral TFP Performance......Page 111
Explaining Low Productivity......Page 115
Raising Japan’s Long-Term Rate of Growth......Page 121
FIVE The Performance of Foreign Firms and the Macroeconomic Impact of Foreign Direct Investment......Page 123
Does Inward FDI Raise Japan’s TFP?......Page 124
Comparing the Performance of Foreign and Domestic Firms in Japan......Page 125
M&As and Target Firm Performance......Page 130
Summary......Page 131
The Macroeconomic Impact of Inward FDI......Page 132
Conclusion......Page 141
Basic Assumptions onMarket and Technology......Page 142
The Profit Maximization Behavior of Firms......Page 143
Capital Accumulation Induced by FDI......Page 144
Japan’s GDP Before and After Inward FDI......Page 145
The Effects on Japan’s Balance of Payments......Page 146
(3) Interest payments abroad for Japan’s liabilities created by the capital accumulation induced by inward FDI......Page 147
SIX The Impact of Foreign Direct Investment in Japan: Case Studies of the Automobile, Finance, and Health Care Industries......Page 149
Automobile Industry......Page 150
Case Study: The Renault–Nissan Alliance......Page 152
Renault–Nissan: The Repercussions......Page 155
Suppliers and the Keiretsu......Page 158
Summary......Page 161
Banking and Insurance......Page 162
FDI in the Financial Sector – An Overview......Page 164
Investment Banking......Page 165
Retail and Commercial Banking......Page 171
Insurance......Page 175
Health Care......Page 183
The Pharmaceutical Industry......Page 185
Medical Devices......Page 194
Health Care Services......Page 198
Other Sectors......Page 200
Wholesale and Retail......Page 201
Telecommunication......Page 202
Synthesis and Conclusion......Page 207
SEVEN The Prospects for Foreign Direct Investment in Japan......Page 211
Japan as an FDI Destination......Page 212
Macroeconomic Prospects......Page 221
Japan’s Growth Prospects......Page 222
Regional Growth Dynamics and Their Implications......Page 224
Political, Social, and Cultural Factors......Page 227
Government Policies and Business Attitudes Toward FDI......Page 228
Social and Cultural Aspects......Page 233
Japan’s Relations with Its Neighbors......Page 238
Economic Determinants......Page 241
The Policy Framework for FDI......Page 242
Business FacilitationMeasures......Page 249
Conclusion......Page 251
EIGHT Conclusion......Page 254
Trends in Japanese Inward FDI......Page 255
Inward FDI and Economic Growth......Page 259
References......Page 267
Index......Page 278