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 13: Chemicals, Plastics, Glass and Rubber Industries

Roger Farrell


THE CHEMICALS INDUSTRY The Japanese chemical products sector manufactures agricultural chemicals, chemical fertilisers, organic chemicals, industrial organic chemicals such as plastics and synthetic rubber, synthetic detergents, paints and printing ink, as well as photographical material and explosives. Overall, the sector comprises all industrial chemicals, including organic and inorganic chemicals, pharmaceuticals, fertilisers, cosmetics and plastic products, as well as mineral products such as cement and glass manufacture. Since the 1980s, the sector has contributed around 15 per cent of Japanese manufacturing value added, with 20 per cent of the market supplied by imports and 10 per cent of production exported, so that Japan has been a net importer of chemicals and chemical products. Since the 1980s, there has been an ongoing restructuring of the chemicals industry, with a decline in production of chemical fibres, organic and inorganic chemicals as a proportion of total output, while an expansion in the pharmaceuticals industry has occurred over the same period. Japanese chemical companies expanded into Asia in the late 1960s due to pollution problems in Japan and the need for new overseas production sites. By the late 1970s, rising oil prices provided another incentive to invest overseas to secure sources of raw materials. The establishment of a major petrochemicals complex in Singapore was a reaction to these factors and to generous tax and other incentives offered by the government of Singapore to Japanese investors, as well as the reliability of electricity supply and political stability (Hyakushima, 1999). The Japanese aid program has on...

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