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The Impact Of Institutional And Social Characteristics On Foreign Direct Investment: Evidence From Japan

Author

Listed:
  • NAVINA LUCKE

    (Technische Universitaet Dresden, Faculty of Business Management and Economics, Dresden, D-01062, Germany)

  • ALEXANDER KARMANN

    (Technische Universitaet Dresden, Faculty of Business Management and Economics, Dresden, D-01062, Germany)

  • STEFAN EICHLER

    (Technische Universitaet Dresden, Faculty of Business Management and Economics, Dresden, D-01062, Germany)

Abstract

We examine the determinants of Japanese foreign direct investment (FDI) focusing on institutional and social factors. Using panel data on 59 countries from 1995 to 2008, we find that host countries with free and open markets and greater cultural distance from Japan attract Japanese FDI. Good institutions, such as a well-developed legal framework and an effective government, are important in promoting Japanese FDI to emerging economies, whereas fewer regulatory restrictions, lower tax burden, and more religious diversity attract Japanese FDI to developed countries. We find that corruption stimulates Japanese FDI to developed countries, which is contrary to most previous research.

Suggested Citation

  • Navina Lucke & Alexander Karmann & Stefan Eichler, 2013. "The Impact Of Institutional And Social Characteristics On Foreign Direct Investment: Evidence From Japan," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-55.
    • Handle: RePEc:wsi:afexxx:v:08:y:2013:i:02:n:s2010495213500103
    DOI: 10.1142/S2010495213500103
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    References listed on IDEAS

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    1. McCleary, Rachel & Barro, Robert, 2003. "Religion and Economic Growth across Countries," Scholarly Articles 3708464, Harvard University Department of Economics.
    2. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
    3. International Department, 2004. "Revision of Balance of Payments Related Statistics," Bank of Japan Research Papers 2004-12-30, Bank of Japan.
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    More about this item

    Keywords

    FDI; institutions; Japan; panel analysis; JEL Classifications: F21; JEL Classifications: F23; JEL Classifications: H11; JEL Classifications: E02; JEL Classifications: O53;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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