Essay about Japanese Foreign Direct Investment (FDI)

1175 Words 5 Pages

In the era of globalization, international trade and international investments are expanding at exponential rates. Almost all developed countries are involved in Foreign Direct Investment processes, both in the form of outward and inward FDI. Among those developed countries there is the case of Japan that is different; Japanese attitude towards FDI has always been, in fact, very cautious. One one hand, Japanese outward foreign investment and exports have played a fundamental role in the postwar period of economic rise; on the other hand, the accesses to the domestic market by foreign investors, the so called Inward FDI, has been very limited. (Paprzycki, Fukao, 2008).
Japan is a highly industrialised country, it has a large-sized market, its labour force is very well-educated and the political situation is much more stable than almost all other East asian countries, then why is inward foreign direct investment rate so small in Japan? ( Frank, 1975).
As a study of Hara and Razafimahefa (2003) highlights: “in 1999, inward FDI amounted to 0.7% of the GDP whereas the ratio reached 9.3%, 9.5%, 11.7% and 23.3% for Germany, The United States, France and England, respectively”.
Even if the level of inward FDI is still very low, from the second half of 1990 its level is steadily increased; it's passed, in fact, from 3,837 millions US$ to 28,276 millions US$ in 2000. (Hara, Razafimahefa, 2003). Japanese government has promoted some policies to help Inward FDI to rise…