Go Global to Japan: Analysis of Inward FDI Distribution

Abstract

For many years, Japan has attracted exceptionally low levels of Foreign Direct Investment. This study sets out to provide a better understanding of the activity of foreign affiliates in Japan, and suggests strategies Japanese policy makers may undertake to optimize the potential for positive spillover effects from Foreign Direct Investment in the future. Using firm-level data, the pattern of distribution of capital and labor of foreign affiliates operating in Japan is presented and analyzed. From 1999 to 2008, foreign affiliates have grown rapidly in numbers, paid capital and number of employees. Nevertheless, dynamics differ between foreign affiliates depending on their origin, position in relation with international trade flows, the nature of the activity they undertake and their place within the organizational structure of their parent multinational company.

Keywords:

• Inward foreign direct investment
• multinational company affiliate
• Japan
• firm-level data
• multinational company

JEL codes:

• F23
• O32
• O33

Additional information

Notes on contributors

Victoria Kravtsova

Victoria Kravtsova is a Researcher at Hitotsubashi University (Tokyo, Japan). Funded by Japanese Society for Promoting Science (JSPS) the research has been focused on the microeconomic quantitative assessment of productivity and the role of innovation and internationalization, mainly in terms of trade and FDI, in TFP growth. Previously, Victoria Kravtsova research at the University of Glasgow (UK) dealt with spatial issues of productivity distribution in the UK. At the Vienna Institute for Comparative Economics (WIIW) the role of FDI inflows in Austria and the role of openness to trade for a group of transition countries have been examined from the host country's perspective. The focus on the empirical comparative analysis in International Economics has been a continuation of the research she conducted for her PhD in Economics in both Sweden and the Netherlands (completed in 2007) and work at European Bank for Reconstruction and Development (EBRD) in London.