Japanese Investment in the World Economy
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Japanese Investment in the World Economy

A Study of Strategic Themes in the Internationalisation of Japanese Industry

Roger Farrell

This book examines Japanese Foreign Direct Investment (FDI) in the world economy over more than five decades. It provides a unique focus on the internationalisation experience of selected industries, such as forestry, textiles, electronics, motor vehicles, steel and services as well as case studies of individual firms. Japanese Investment in the World Economy is distinctive in that it examines overseas investment by firms in the primary, manufacturing and services sectors over the period in which the Japanese economy became the second largest in the world.
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Chapter 9: Resources and Energy

Roger Farrell


BACKGROUND The Japanese economy has long been reliant on imported energy commodities such as petroleum, natural gas, uranium and coal for most of its total energy supplies. As the Japanese mining industry has declined, mineral-processing industries have become more reliant on imports of coal, crude ore and concentrates of most non-fuel minerals as fuels or inputs for industries, such as chemicals, iron and steel, nonferrous metals and fabricated metal products. Employment in the traditional mining industry in Japan fell from over 500,000 in 1960 to less than ten per cent of this total by 2000, as many mines became uneconomic and closed due to lower-cost imports. Japan’s significant reliance on imports of resources and energy has encouraged national policies to increase the security and stability of supplies: the early use of scarce foreign investment funds for overseas mining investments, preferential financing of overseas resources developments by consortia of Japanese industry and the creation of a national stockpile of strategic resources. From the 1960s, Japanese firms, with the support of government, sought to secure supplies of necessary raw material and energy, including iron ore, coal and natural gas. A policy of ‘resources diplomacy’ developed which aimed to ensure the stability of these supplies, especially after the oil shocks of the 1970s. This approach encouraged the diversification of overseas supplies of energy and resources to reduce reliance on a few suppliers; a greater use of foreign investment to secure these supplies; and a reduction in the use of long-term...

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