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Foreign Direct Investment and Keiretsu: Rethinking U.S. and Japanese Policy

In: The Effects of U.S. Trade Protection and Promotion Policies

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  • David E. Weinstein

Abstract

This paper focuses on two issues. First, a reexamination of the data on the level of foreign direct investment (FDI) in Japan suggests that foreign firms sell five to six times more in Japan than is commonly believed. Previous studies severely underestimated the stock of FDI in Japan due to poor data. Second, after finding that even after adjusting for various factors the level of FDI in Japan is still low, the paper explores explanations for this phenomenon. A second main conclusion is that government tax and financial policy continues to inhibit foreign takeovers through the promotion of stable shareholding.

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Bibliographic Info

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This chapter was published in:

  • Robert C. Feenstra, 1997. "The Effects of U.S. Trade Protection and Promotion Policies," NBER Books, National Bureau of Economic Research, Inc, number feen97-1, May.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 0310.

    Handle: RePEc:nbr:nberch:0310

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    References

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    1. Edward M. Graham & Paul R. Krugman, 1993. "The Surge in Foreign Direct Investment in the 1980s," NBER Chapters, in: Foreign Direct Investment, pages 13-36 National Bureau of Economic Research, Inc.
    2. Encarnation, Dennis J. & Mason, Mark, 1990. "Neither MITI nor America: the political economy of capital liberalization in Japan," International Organization, Cambridge University Press, vol. 44(01), pages 25-54, December.
    3. Takatoshi Ito & Masayoshi Maruyama, 1991. "Is the Japanese Distribution System Really Inefficient?," NBER Chapters, in: Trade with Japan: Has the Door Opened Wider?, pages 149-174 National Bureau of Economic Research, Inc.
    4. Roe, Mark J., 1990. "Political and legal restraints on ownership and control of public companies," Journal of Financial Economics, Elsevier, vol. 27(1), pages 7-41, September.
    5. Noland, Marcus, 1995. "Why are prices in Japan so high?," Japan and the World Economy, Elsevier, vol. 7(3), pages 255-261, September.
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    Cited by:
    1. Michael S. Gibson, 1998. ""Big Bang" deregulation and Japanese corporate governance: a survey of the issues," International Finance Discussion Papers 624, Board of Governors of the Federal Reserve System (U.S.).
    2. Robert C. Feenstra, . "Facts And Fallacies About Foreign Direct Investment," Department of Economics 98-04, California Davis - Department of Economics.
    3. Ito, Keiko & Fukao, Kyoji, 2003. "Foreign Direct Investment and Trade in Japan: An Empirical Analysis Based on the Establishment and Enterprise Census for 1996," Discussion Paper Series a441, Institute of Economic Research, Hitotsubashi University.
    4. Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2003. "The evolution of US outward foreign direct investment in the pacific rim: a cross-time and country analysis," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1779-1787.
    5. Barcena-Ruiz, Juan Carlos, 2003. "Politically preferred wage bargaining structures," European Journal of Political Economy, Elsevier, vol. 19(2), pages 341-353, June.
    6. Magnus Blomstrom & Denise Konan & Robert E. Lipsey, 2000. "FDI in the Restructuring of the Japanese Economy," NBER Working Papers 7693, National Bureau of Economic Research, Inc.

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