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The Changing Climate For Foreign Direct Investment Into Japan


  • Peter Drysdale


  • Toshi Naito
  • Ray Trewin
  • Dominic Wilson


Japans prolonged recession over the last five years has provided the impetus for regulatory reform and industry restructuring. Historically, the flow of Foreign Direct Investment (FDI) into Japan has been small for an economy of its size. The high degree of vertical integration and relatively closed business networks that characterised the corporate system made it hard for newcomers to gain access, while the tradition of lifetime employment limited the ability of foreign firms to recruit quality staff. Dramatic declines in the price of Japanese equities and land since the collapse of the bubble economy of the early nineties has been accompanied by a sharp increase in foreign participation in the Japanese economy. Traditional business relationships are opening up, regulations are being dismantled or revised and increased foreign involvement is now accepted as inevitable, even through mergers and acquisitions (M&A). Potentially profitable openings created by restructuring and reform is likely to see the trend towards greater foreign investment in Japan maintained over the next decade, especially in non-manufacturing.

Suggested Citation

  • Peter Drysdale & Toshi Naito & Ray Trewin & Dominic Wilson, 1999. "The Changing Climate For Foreign Direct Investment Into Japan," Finance Working Papers 21910, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:21910

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    Cited by:

    1. Dr Ray Trewin, 2009. "Poultry Sector Support and Protection, Structural Change and Disease Risk," International and Development Economics Working Papers idec09-01, International and Development Economics.

    More about this item


    FDI; Japan; Vertical Integration;

    JEL classification:

    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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