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This paper analyzes both the impact of Japan's foreign direct investment (FDI) into East Asia on trade and the structural changes in trade that have occurred in the region. To do this, gravity equations are estimated using trade data disaggregated to the industry and product levels. The analysis shows that the impact of FDI on trade varies by industry. Specifically, in the electrical machinery sector, the positive impact of FDI on trade increased substantially from the 1990s, when division of labor was advancing rapidly especially for IT-related products. In the textile industry, which experienced a moderate increase in the division of labor primarily for intermediates, the impact of FDI on trade was positive, although not as great as seen in the electrical machinery industry. On the other hand, in the transportation machinery industry, where production processes were shifted from Japan to other East Asian countries and where Japan's exports were substituted with local production, FDI had virtually no impact on trade.
The international flow of long-term private capital has increased dramatically in the 1990s. In fact, many policymakers now consider private foreign capital to be an essential resource for the acceleration of economic growth. This volume focuses attention on the microeconomic determinants and effects of foreign direct investment (FDI) in the East Asian region, allowing researchers to explore the overall structure of FDI, to offer case studies of individual countries, and to consider their insights, both general and particular, within the context of current economic theory.
Both proponents and opponents of globalization assume it is a process that sweeps across national borders. Indeed, over the last twenty years, the key features of globalization provide prima facie evidence for this conventional wisdom. Dramatic developments in information and communications technology, the rise of global companies and production networks, the unstoppable internationalization of financial markets, and the deregulation and privatization of service sectors are all important examples of how this process unfolds in its raw form. Nevertheless, the increase in regional economic activity is another striking feature of this process. As multinational corporations extend their global reach, regional networks also emerge in the global trading system. Globalization therefore does not only mean a global convolution of economies, but could also lead to a spatial concentration of economic activity. All through the 1990s and at the beginning of the new century, East Asia experienced numerous structural changes leading to interesting market developments. South Korea’s rise to developed country status, the integration of the Southeast Asian economies, and the rise of China have made this region the manufacturing center of the global economy. Considering the economic importance of Japan and the other East Asian nations in the world, the crucial questions that arise include: What are the linkages between the global strategies of multinational corporations and their regional business operations? Why do subregional strategies emerge, especially recently to take advantage of China as a production base and market? Are the modern business practices in a multinational corporation’s home country easily transferred to their overseas operations and are they readily absorbed by local employees? Finally, which strategic directions are Japanese, American, East Asian and European enterprises going in this important business area of the world? To answer these questions, this book takes a closer look at several structural features of the East Asian economy and the corporate and business strategies of multinational corporations. The volume assembles up-to-date research by a number of European, Australian and Japanese scholars, and presents analysis of various business aspects of regional strategies in a global economy.
A major force in East Asia's remarkable economic growth and industrial transformation, foreign direct investment has been growing at 14?15 percent annually in Southeast Asia and China over the last decade. This timely volume examines the impact of investment on trade in the region, focusing especially on microeconomic issues of strategy, activity, and behavior of corporate investors. The contributors explore the role of corporate alliances and networks of Japanese and Chinese firms, as well as the influence of investors from newly industrializing economies, in the relocation of production and trade within the region.
Japanese foreign direct investment has played a leading role in Asian economies for more than two decades. This book, describing the changing industrial dynamics after the Asian currency crisis in 1997, focuses on corporate strategies of Japanese automobile and electronics companies in Asian nations, with detailed analysis of management issues and strategies from the viewpoint of both the home economy and the recipient host economies. Among the cases presented are the global restructuring of the Korean automobile industry and the transfer of automotive technology to China via Taiwan. Other studies, from the electronics industry, look at production sites in Malaysia, backward integration in Singapore, and forward integration in Hong Kong. The contributions of specialists from Asia, Europe, and the United States collected here envision an ongoing process of globalization and provide valuable perspective and background for business management and East Asian studies.
As Japan's newfound economic power leads to increased political power, there is concern that Japan may be turning East Asia into a regional economic bloc to rival the U.S. and Europe. In Regionalism and Rivalry, leading economists and political scientists address this concern by looking at three central questions: Is Japan forming a trading bloc in Pacific Asia? Does Japan use foreign direct investment in Southeast Asia to achieve national goals? Does Japan possess the leadership qualities necessary for a nation assuming greater political responsibility in international affairs? The authors contend that although intraregional trade in East Asia is growing rapidly, a trade bloc is not necessarily forming. They show that the trade increase can be explained entirely by factors independent of discriminatory trading arrangements, such as the rapid growth of East Asian economies. Other chapters look in detail at cases of Japanese direct investment in Southeast Asia and find little evidence of attempts by Japan to use the power of its multinational corporations for political purposes. A third group of papers attempt to gauge Japan's leadership characteristics. They focus on Japan's "technology ideology," its contributions to international public goods, international monetary cooperation, and economic liberalization in East Asia.
We examine the relationship between Japanese FDI outflows, domestic and foreign fixed investment, and the exchange rate. The results indicate that aggregate FDI outflows have been driven by investment in Japan and the exchange rate, while the geographic distribution of such investment has been influenced by foreign economic conditions. We also find that FDI outflows have a temporary impact on exports but a permanent effect on imports. We find no evidence that behavior with respect to East Asia differs from that with respect to North America or Europe.
The economic success achieved in the last decade in East Asia has brought about a fundamental reorientation in the Western view of the region. In order to contribute to a better understanding of present events and future developments in the area, leading East Asia economists and men of experience in Asian business from Asia, America, and East and West Europe have written papers on their research or business fields for this volume. The individual articles deal with problems common to the East Asian region and the Pacific area as well as with specific economic problems of Japan, China and South Korea. The volume is divided into four parts: East Asia and the Pacific Basin includes articles on supra-national issues, for example on the international economic relations of Japan, China, Taiwan and Korea. Japan includes articles on Japanese industrial and business structure, technological policy, exports and other issues. China includes articles on structural change, economic reforms, fiscal policy, agriculture and other issues. Korea includes articles on economic and industrial policy, restructuring, protectionism and other issues. The occasion of the publication of this volume is the 70th birthday of Willy Kraus, who for many years has been actively concerned with the questions of development in the East Asian region.
Foreign Direct Investment in Japan presents a detailed examination of trends of inward foreign direct investment (FDI) and their impact on the Japanese economy. Historically much less open to foreign trade and investment than other major economies, Japan experienced an unprecedented jump in FDI inflows around the turn of the millennium. This book looks at the profound changes in Japan that made this jump possible and considers foreign firms' potential contribution to productivity and overall economic growth. Detailed case studies illustrate that in certain sectors the presence of foreign firms already is a key factor shaping industry dynamics. Yet, despite recent changes, resistance to inward FDI remains strong and the government could do much more if it were committed to attracting FDI. Overall, Japan continues to appear reluctant to embrace fully, and therefore seems unlikely to benefit even more substantially from, globalization.