Japan's trade and FDI policies in the first decade of the 21st century facts and probable trends

The impact of the Asian crisis in 1997–8 on Japan, was relatively great as the country had already gone through a decade of stagnation. Yet the author* has argued before, that this was no ‘lost decade’ but a period of transformation, leading to further internationalization (globalization) of the economy and society. In a peculiar way, the Japanese government has been continuously influenced in the same direction by the inflexibly protectionist behaviour of domestic business circles. Its policy consideration was to confront them, especially the agricultural lobby, with huge Japanese manufacturing corporations and trading houses operating on a global scale, which would have strong interests in free trade and in keeping up with rivals. For these mainly transnational companies have realized that processes towards regionalism in the world (such as NAFTA in North America and the EU in Europe) may crowd them out of significant commodity and capital markets or face them with latecomers’ disadvantages. FTAs, on the other hand, have pressed competition on Japan and so given momentum to domestic structural changes continually called for in business at home and abroad. At the same time, priority is clearly being given to neighbouring East and Southeast Asian countries in the sequence of agreements being concluded.