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The Impact of Foreign Direct Investment in Japan: Case Studies of the Automobile, Finance, and Health Care Industries

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  • Ralph Paprzycki

Abstract

Having historically received very little foreign direct investment, Japan has experienced a substantial increase in such inflows in recent years. This paper analyzes the impact of the growing presence of foreign firms on the Japanese economy through detailed case studies on the automobile, finance, and health care industries. The wholesale & retail and the telecommunications sector are also briefly examined. The case studies show that in the sectors considered, foreign firms in one way or another are contributing to a greater degree of competition, are exposing domestic firms to global best practice, and are increasing the range of products and services available in Japan. In many of the sectors, they are also contributing to changes in industry structure and employment practices. The case studies thus illustrate that foreign direct investment - even at its present levels, which, although large by Japanese standards, are still low in international comparison - can be an important catalyst for change and hence help to reinvigorate the Japanese economy.

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  • Ralph Paprzycki, 2006. "The Impact of Foreign Direct Investment in Japan: Case Studies of the Automobile, Finance, and Health Care Industries," Hi-Stat Discussion Paper Series d05-141, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:hstdps:d05-141
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    File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2005/pdf/D05-141.pdf
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    1. Keiko Ito, 2004. "Plant Productivity, Keiretsu, and Agglomeration in the Japanese Automobile Industry: An Empirical Analysis Based on Micro-Data of Census of Manufactures 1981-1996," Hi-Stat Discussion Paper Series d04-51, Institute of Economic Research, Hitotsubashi University.
    2. Ralph Paprzycki & Kyoji Fukao, 2005. "The Extent and History of Foreign Direct Investment in Japan," Hi-Stat Discussion Paper Series d05-84, Institute of Economic Research, Hitotsubashi University.
    3. Ralph Paprzycki, 2004. "What Caused the Recent Surge of FDI into Japan?," Hi-Stat Discussion Paper Series d04-31, Institute of Economic Research, Hitotsubashi University.
    4. Ralph Paprzycki & Kyoji Fukao, 2004. "Overcoming economic stagnation in Japan: The importance of total factor productivity and the potential contribution of foreign direct investment," Hi-Stat Discussion Paper Series d04-39, Institute of Economic Research, Hitotsubashi University.
    5. Christina L. Ahmadjian & James R. Lincoln, 2001. "Keiretsu, Governance, and Learning: Case Studies in Change from the Japanese Automotive Industry," Organization Science, INFORMS, vol. 12(6), pages 683-701, December.
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    1. Ralph Paprzycki, 2007. "The Determinants of and Prospects for Foreign Direct Investment in Japan," Hi-Stat Discussion Paper Series d07-211, Institute of Economic Research, Hitotsubashi University.

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