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Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996

  • Ito, Keiko
  • Fukao, Kyoji

Using micro-data of the Establishment and Enterprise Census, we compile new statistics on the employment of Japanese affiliates of foreign firms at the 3-digit industry level for the year 1996. We find that the existing official statistics severely underestimate inward FDI. Nevertheless, the level of inward FDI in Japan is much lower than that in the United States. The results of our regression analyses imply that by eliminating the restrictions on inward FDI and reducing government activities, Japan can increase inward FDI in the service sector. Our results also suggest that the keiretsu do not act as an impediment to inward FDI.

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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 19 (2005)
Issue (Month): 3 (September)
Pages: 414-455

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Handle: RePEc:eee:jjieco:v:19:y:2005:i:3:p:414-455
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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  1. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
  2. David L. Carr & James R. Markusen & Keith E. Maskus, 1998. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," NBER Working Papers 6773, National Bureau of Economic Research, Inc.
  3. Jonathan Eaton & Akiko Tamura, 1995. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," NBER Working Papers 4758, National Bureau of Economic Research, Inc.
  4. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-13, August.
  5. Fukunari Kimura & Robert E. Baldwin, 1998. "Application of a Nationality-Adjusted Net Sales and Value- Added Framework: The Case of Japan," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 49-82 National Bureau of Economic Research, Inc.
  6. Kyoji Fukao & Keiko Ito, 2003. "Foreign Direct Investment and Services Trade: The Case of Japan," NBER Chapters, in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 429-480 National Bureau of Economic Research, Inc.
  7. repec:cup:cbooks:9780521873680 is not listed on IDEAS
  8. Grubert, Harry & Mutti, John, 1991. "Taxes, Tariffs and Transfer Pricing in Multinational Corporate Decision Making," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 285-93, May.
  9. David E. Weinstein, 1996. "Foreign Direct Investment and Keiretsu: Rethinking U.S. and Japanese Policy," NBER Working Papers 5612, National Bureau of Economic Research, Inc.
  10. Peter A. Petri, 1991. "Market Structure, Comparative Advantage, and Japanese Trade under the Strong Yen," NBER Chapters, in: Trade with Japan: Has the Door Opened Wider?, pages 51-84 National Bureau of Economic Research, Inc.
  11. Robert Z. Lawrence, 1993. "Japan?s Low Levels of Inward Investment: The Role of Inhibitions on Acquisitions," NBER Chapters, in: Foreign Direct Investment, pages 85-112 National Bureau of Economic Research, Inc.
  12. Gary R. Saxonhouse, 1993. "What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 21-43, Summer.
  13. Pugel, Thomas A & Kragas, Erik S & Kimura, Yui, 1996. "Further Evidence on Japanese Direct Investment in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 208-13, May.
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