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Production Offshoring and Investment by Japanese Firms

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Listed:
  • Mr. Joong S Kang
  • Shi Piao

Abstract

We trace Japanese corporate investment across different types of firms over the past decades and estimate the main determinants of investment. We find that there are differences in investment behavior between firms expanding abroad and those operating mainly in domestic markets. On the back of a trend increase in production offshoring, investment by large companies, especially those in the transportation sector, is more positively associated with cash flow while responding less to Q ratio. These findings are consistent with the subdued recovery of private investment in recent years despite booming stock markets and the large build up of cash holdings by Japanese corporates.

Suggested Citation

  • Mr. Joong S Kang & Shi Piao, 2015. "Production Offshoring and Investment by Japanese Firms," IMF Working Papers 2015/183, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/183
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    References listed on IDEAS

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    Cited by:

    1. Atsuki Hirata & Yusuke Takahashi & Naoya Kato, 2025. "Interest Rate Sensitivity of Capital Investment in Japan: An Analysis Using Panel LP-IV," Bank of Japan Working Paper Series 25-E-13, Bank of Japan.
    2. Yoshihiko Hogen & Yojiro Ito & Kenji Kanai & Naoya Kishi, 2024. "Changes in the Global Economic Landscape and Issues for Japan's Economy," Bank of Japan Working Paper Series 24-E-3, Bank of Japan.
    3. Robert Fay & Justin-Damien Guénette & Martin Leduc & Louis Morel, 2017. "Why Is Global Business Investment So Weak? Some Insights from Advanced Economies," Bank of Canada Review, Bank of Canada, vol. 2017(Spring), pages 56-67.

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