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 11: The Shifting Textiles Industry

Roger Farrell


INTRODUCTION The textiles industry broadly includes the manufacture of natural and artificial fibres and textiles, apparel and other finished products made from fabric and natural and chemical fibres. In Japan, the textiles industry was an important part of the national economy in the late nineteenth century, the early twentieth century and post-war period. During the 1950s, the textiles industry received government support and was designated as a key industry to earn foreign exchange for economic recovery. As Japanese industrial structure switched away from a dependence upon light industry, the textiles industry was one of the earliest industries to internationalise. To retain competitiveness, textiles firms used foreign direct investment to relocate their production processes to lower-cost countries, while retaining higher-value added processes in Japan. Larger firms such as Toray, retained capital-intensive production at home and used overseas affiliates to handle more labour-intensive processes. Since the 1960s, the Japanese textiles industry has moved into the highly capital-intensive production of synthetic fibres, where it retained international competitiveness. In other parts of the industry however there was a steady decline in industry and output and increasing imports as excess labour was shed. From the 1960s to the mid-1980s, the textiles industry lost 400,000 workers as Japanese firms ceased production or relocated offshore. This trend accelerated in following decades, with domestic employment of textile mills falling from 780,000 in 1985 to only 245,000 in 2001. Notably, employment in the apparel sector decreased from 730,000 to 485,000 over...

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