FDI in the Restructuring of the Japanese Economy

33 Pages Posted: 17 May 2000 Last revised: 17 Oct 2010

See all articles by Magnus Blomstrom

Magnus Blomstrom

Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)

Denise Eby Konan

University of Hawaii at Manoa

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

Date Written: May 2000

Abstract

This paper examines how inward and outward foreign direct investment (FDI) have influenced the restructuring of the Japanese economy and can be expected to continue to do so in the future. We find that outward investment has helped Japanese firms to sustain foreign market shares and contributed to the restructuring of the Japanese economy away from older industries. By shifting from exporting to affiliate production, there has been a geographical reallocation of the activities of Japanese firms, particularly those of multinational manufacturing firms. However, Japanese outward FDI is still not very large relative to the Japanese economy, despite the rapid growth since the mid-1980s, and there is still scope for significant increase when compared with the levels of most other OECD countries. Inward FDI will presumably have an even stronger impact on the restructuring of the Japanese economy. Although the stock of inward foreign direct investment is still very small, there are important changes under way. Deregulation has opened up much of the industrial and service sectors to foreign multinationals.

Suggested Citation

Blomstrom, Magnus and Konan, Denise Eby and Lipsey, Robert E., FDI in the Restructuring of the Japanese Economy (May 2000). NBER Working Paper No. w7693. Available at SSRN: https://ssrn.com/abstract=228986

Magnus Blomstrom (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
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S-113 83 Stockholm
Sweden
+46 8 736 9265 (Phone)
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National Bureau of Economic Research (NBER), at New York

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New York, NY 10016-4309
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Denise Eby Konan

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

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