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Japanese multinationals in Asia : capabilities and motivations

Author

Listed:
  • Dasgupta, Susmita
  • Mody, Ashoka
  • Sinha, Sarbajit

Abstract

Using a specially designed survey, the authors identify the characteristics of Japanese firms likely to invest world wide and in key Asian countries and country characteristics associated with Japanese investment in Asia. Investment abroad is related negatively to research and development (R&D) undertaken but positively to export propensity, indicating that the intangible assets conducive to foreign investment derive not from research but from marketing networks and production skills. Among the foreign investors, those investing in Asia are less prone to R&D. They are also less export-oriented, suggesting that Asian Investment is not driven by trade barriers, unlike investment in the United States and Europe. Firms investing in Asia look to the human capital of the host, though interest in low wages expands the greater and more diverse the investment. The behavior of competitors is a strong guide to the direction of investment. Whether earnings can be repatriated is the factor most conducive to foreign investment, although its importance declines as a firm gains experience in a country.

Suggested Citation

  • Dasgupta, Susmita & Mody, Ashoka & Sinha, Sarbajit, 1996. "Japanese multinationals in Asia : capabilities and motivations," Policy Research Working Paper Series 1634, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1634
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    References listed on IDEAS

    as
    1. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-413, August.
    2. Richard E. Caves, 1993. "Japanese Investment in the United States: Lessons for the Economic Analysis of Foreign Investment," The World Economy, Wiley Blackwell, vol. 16(3), pages 279-300, May.
    3. Raymond Vernon, 1993. "Where Are the Multinationals Headed?," NBER Chapters,in: Foreign Direct Investment, pages 57-84 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Parello, Carmelo Pierpaolo, 2008. "A north-south model of intellectual property rights protection and skill accumulation," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 253-281, February.

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