Essay about Japanese Foreign Direct Investment (FDI)

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JAPANESE FDI 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 …show more content…

Therefore, it has been obliged to deregulate foreign-exchange controls by observing article 8 of the IMF (International Monetary Fund) charter. Despite all this, Japanese government at that time considered inward foreign investment as a threat for local market; in 1967, in fact, the Gaishi Shingikai (Foreign Investment Deliberation Council) highlighted the negative points of the liberal capitalization, defining the domination of foreign firms as negative for Japan's economy. (Suginohara, 2008). From 1960, with the approval by the government of the Basic Plan for Liberalization of Trade and Foreign Exchange, a major number of sectors was liberalized; Japan subsequently liberalized imports, capital transactions and financial sector. Starting from the second half of the 1960s Inward and outward FDI were liberalized step by step, and in May 1972 the possession of foreign currency by residents was liberalized. In December 1980 the Foreign Capital Law was incorporated to the Foreign Exchange Law. This revised law was aimed to liberalize capital account transactions (Aramaki, 2006). The revision of the Foreign Exchange Law permitted the creation of a large number of foreign-owned companies and a consequent phenomenal growth of FDI in the manufacturing sector (from 1,092 millions $ in 1976-1980 to 2,359 millions $ in 1981-1985 and 7,092 millions $ between 1986 and 1990) . (Study Sponsored

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