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 25: Concluding Comments

Roger Farrell


OVERVIEW The pattern of Japanese foreign direct investment has changed considerably over the five decades covered by this study, on both a geographical and an industrial basis. As Japan recovered from the Second World War, investment flows abroad were comparatively small and sought primarily to facilitate the expansion of exports by creating an international network of sales affiliates and to secure supplies of resources and energy for domestic industries. In the following years this pattern continued to change, as manufacturing firms relocated production processes to lower cost economies, especially in East Asia, while defensive trade measures in developed country markets led firms to establish or acquire production facilities in North America and Europe. Complementary investment by Japanese suppliers in the glass, chemicals, plastics, metal and parts and components industries occurred to maintain the supply chain to the automotive and electronics sectors. Steel investments were often primarily focused on overcoming trade barriers to the direct supply of automotive steel to car makers. From the late 1980s, the rapid expansion of Japanese services investment in developed economies suggested a convergence to the model of Western foreign direct investment – but many of the new affiliates, mergers and acquisitions by the financial, insurance, real estate and related industries were comparatively unsuccessful. Major losses occurred for financial and real estate FDI, which were related to the end of the bubble economy in Japan. The massive losses experienced by NTT from its untimely investments in leading telecommunications service providers such as AT&T (just...

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