Foreign Direct Investment in Japan

'This book belongs on the bookshelf of every serious scholar interested in the topic of FDI in Japan.' - Raj Aggarwal, International Trade Journal 'It is certain that researchers and practitioners of the subject will find this book valuable. One of the most important contributions of this book is in establishing links between various approaches - macroeconomics, multinational management and business strategy - often using radically different languages, to extend our understanding of the low level of FDI inflows to Japan.' - Lucia Piscitello, Transnational Corporations ' ...this is an important book on an increasingly important topic.' - Walter Hatch, The Journal of Asian Studies Foreign Direct Investment in Japan is the first serious and comprehensive examination of why the direct participation of foreign firms in the economy of Japan is lower than in any other advanced industrial nation. An internationally acclaimed group of scholars and practitioners addresses this problem and considers what policy actions, if any, the Japanese government can take to increase direct investment. Foreign exchange controls banned direct investment into Japan until the late 1970s and this is still partially responsible for the low penetration of foreign firms. A fundamental question addressed by the book is whether or not ownership advantages in technology and management know-how possessed by foreign firms are strong enough to overcome the extra costs of doing business in Japan. Such extra costs or locational disadvantages include very high land and labour costs as well as business practices unique to Japan, characterized by the long-term customized transaction relationship among assemblers, component suppliers, distributors and financial institutions and the long-time employment system. Although the Government of Japan desires to invite more foreign firms, this book demonstrates that there are many areas where direct investment has been adversely affected by internal regulation. Foreign Direct Investment in Japan explores this participation of foreign firms in this economy from the perspectives of economic theory, history, and the practical experiences of non-Japanese firms that have attempted to do business directly in Japan.