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The Impact Of Foreign Direct Investment On Japan'S Economic Growth

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  • Parviz Asheghian

    (California State University - San Bernardino)

Abstract

Given the protective nature of Japanese government with regard to foreign direct investment (FDI), there is a growing interest in examining the impact of FDI on the rate of economic growth of this nation. The immense literature on economic growth is composed of studies that concentrate on measuring the domestic variables that affect the economic growth of this nation. However, the relative impact of foreign direct investment on the economic growth in Japan has not received the attention that it deserves. The purpose of this study is: (1) to examine the effect of foreign direct investment on output and total factor productivity growth in Japan, and (2) to see if there is any time-series support for the FD I -led growth hypothesis in this nation. To achieve these goals the study uses a model that is based on the postulates of de Mello. Employing a 32-year period of annual data, the model is estimated by using the Beach-Mackinnon technique, which corrects for autocorrelation. The estimation results suggests the following conclusions: 1. The major determinants of economic growth in Japan are total factor productivity, and domestic investment growth. 2. There is no causal relationships between foreign direct investment growth and economic growth in either direction. 3. There is no casual relationships between foreign direct investment growth and total factor productivity growth in either direction. Presented at the 15th International Conference,Istanbul, Turkey, May 2005.

Suggested Citation

  • Parviz Asheghian, 2005. "The Impact Of Foreign Direct Investment On Japan'S Economic Growth," International Trade and Finance Association Conference Papers 1026, International Trade and Finance Association.
    • Handle: RePEc:bep:itfapp:1026
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