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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.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • David E. Weinstein, 1997. "Foreign Direct Investment and Keiretsu: Rethinking U.S. and Japanese Policy," NBER Chapters,in: The Effects of U.S. Trade Protection and Promotion Policies, pages 81-116 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:0310
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    References listed on IDEAS

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    1. D.N. Saxena, 1989. "Foreign Direct Investment," Foreign Trade Review, , vol. 24(1), pages 76-97, April.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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. Blomström, Magnus & Konan, Denise & Lipsey, Robert E., 2000. "FDI in the Restructuring of the Japanese Economy," SSE/EFI Working Paper Series in Economics and Finance 371, Stockholm School of Economics.
    2. 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.
    3. Robert C. Feenstra, "undated". "Facts And Fallacies About Foreign Direct Investment," Department of Economics 98-04, California Davis - Department of Economics.
    4. Barcena-Ruiz, Juan Carlos, 2003. "Politically preferred wage bargaining structures," European Journal of Political Economy, Elsevier, vol. 19(2), pages 341-353, June.
    5. 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.).
    6. Branstetter, Lee, 2000. "Vertical Keiretsu and Knowledge Spillovers in Japanese Manufacturing: An Empirical Assessment," Journal of the Japanese and International Economies, Elsevier, vol. 14(2), pages 73-104, June.
    7. Farrell, Roger & Gaston, Noel & Sturm, Jan-Egbert, 2004. "Determinants of Japan's foreign direct investment: An industry and country panel study, 1984-1998," Journal of the Japanese and International Economies, Elsevier, vol. 18(2), pages 161-182, June.
    8. Ito, Keiko & Fukao, Kyoji, 2005. "Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996," Journal of the Japanese and International Economies, Elsevier, vol. 19(3), pages 414-455, September.

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