A Study on Divestitures by Japanese Corporations in Foreign Countries: I. Japanese direct foreign investment and divestiture

A. Post-1970 direct foreign investment: In comparison with firms of other developed economies, Japanese firms did not begin direct foreign investment in earnest until the latter half of the 1960s. From the start of the 1970s, however, such investment expanded rapidly, and it increased in particular during the boom years in the world economy of 1972 and 1973. In 1973, the year of the first oil crisis, foreign exchange licenses and notifications for foreign investment reached U.S. $3.5 billion. From the following year, for reasons such as the onset of an international recession, the low profitability of Japanese corporations, the rising nationalism in developing countries which affected their policies toward foreign capital, and friction caused by the foreign operations of Japanese firms, the appeal of foreign investment declined, and levels remained low during 1974-1977 (table 1).