IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Determinants of the Location of Foreign Direct Investment by Japanese Small and Medium-sized Enterprises (in Japanese)

Listed author(s):
  • Shujiro Urata
  • Hiroki Kawai
Registered author(s):

    The empirical results of the determinants of FDI location by Japanese firms show that both supply-side and demand-side factors in the host countries are important determinants. Supply- side factors include abundance of low-wage labor, availability of good infrastructure and good governance, while an important demand-side factor is the presence of sizable local market. Industrial agglomeration, which has both supply-side and demand-side elements, has an important influence on the decision making by Japanese firms. A comparison of the results obtained for SMEs with those for large firms reveals that SMEs are more sensitive to local conditions in making their decision on FDI, especially when they make investments in developing countries. Specifically, SMEs regard the availability of low-wage labor, well-developed infrastructure, and industrial agglomeration much more importantly than large firms. Greater sensitivity of SMEs to local economic conditions in their decision making concerning FDI location can be explained by their limited availability of financial and human resources and high dependence on overseas production in their business. Recognizing the need to develop SMEs in developing countries to promote economic growth, policy makers in developing countries should attract foreign SMEs to undertake FDI in their countries by providing a very attractive business environment.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Economic and Social Research Institute (ESRI) in its journal Economic Analysis.

    Volume (Year): 158 (2000)
    Issue (Month): (January)
    Pages: 3-21

    in new window

    Handle: RePEc:esj:esriea:158a
    Contact details of provider: Postal:
    1-6-1 Nagata-cho, Chiyoda-ku, Tokyo 100-8914

    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:esj:esriea:158a. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (KAWAMOTO Takuma)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.