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The Changing Climate For Foreign Direct Investment Into Japan


Author Info

  • Peter Drysdale


  • Toshi Naito
  • Ray Trewin
  • Dominic Wilson


Japans prolonged recession over the last five years has provided the impetus for regulatory reform and industry restructuring. Historically, the flow of Foreign Direct Investment (FDI) into Japan has been small for an economy of its size. The high degree of vertical integration and relatively closed business networks that characterised the corporate system made it hard for newcomers to gain access, while the tradition of lifetime employment limited the ability of foreign firms to recruit quality staff. Dramatic declines in the price of Japanese equities and land since the collapse of the bubble economy of the early nineties has been accompanied by a sharp increase in foreign participation in the Japanese economy. Traditional business relationships are opening up, regulations are being dismantled or revised and increased foreign involvement is now accepted as inevitable, even through mergers and acquisitions (M&A). Potentially profitable openings created by restructuring and reform is likely to see the trend towards greater foreign investment in Japan maintained over the next decade, especially in non-manufacturing.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 21910.

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Date of creation: Jan 1999
Date of revision:
Handle: RePEc:eab:financ:21910

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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Keywords: FDI; Japan; Vertical Integration;

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Cited by:
  1. Dr Ray Trewin, 2009. "Poultry Sector Support and Protection, Structural Change and Disease Risk," International and Development Economics Working Papers, International and Development Economics idec09-01, International and Development Economics.


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