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FDI in Japan: An "Open Door" or a Legacy of "Non-Institutional" Barriers?

FDI in Japan: An "Open Door" or a Legacy of "Non-Institutional" Barriers? I. Introduction Over the last forty years, Japan has responded to internal and external pressures to open up to foreign direct investment (FDI) flows and yet, for much of the period, has maintained a concern about the potential problems arising from transnational firms' activities (Bailey et al., 1994). As a result, Japan has been seen by the outside world as having a "closed door" to FDI, where foreign investors face numerous "obstacles" to successful penetration of the Japanese market (e.g. Bailey et al., 1992). Up until very recently, this was indeed an accurate assessment, with restrictions on inward FDI linked to, inter alia: - the nature of industrial policy pursued in Japan; - impediments to takeovers embedded in the nature of Japanese corporate governance and organization such as the keiretsu system; and, more generally, - an intrinsic scepticism amongst Japanese officials over the relative costs and benefits of inward FDI. Yet more recently, that closed and restrictive system has undergone a profound set of changes. The economic turmoil of the 1990s after the bursting of the so-called "bubble" economy, along with external pressure (gaiatsu) from the United States, has forced a fundamental rethinking of industrial policy, with Japan http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

FDI in Japan: An "Open Door" or a Legacy of "Non-Institutional" Barriers?

Journal of World Investment and Trade , Volume 4 (2): 27 – Jan 1, 2003
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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190003X00381
Publisher site
See Article on Publisher Site

Abstract

I. Introduction Over the last forty years, Japan has responded to internal and external pressures to open up to foreign direct investment (FDI) flows and yet, for much of the period, has maintained a concern about the potential problems arising from transnational firms' activities (Bailey et al., 1994). As a result, Japan has been seen by the outside world as having a "closed door" to FDI, where foreign investors face numerous "obstacles" to successful penetration of the Japanese market (e.g. Bailey et al., 1992). Up until very recently, this was indeed an accurate assessment, with restrictions on inward FDI linked to, inter alia: - the nature of industrial policy pursued in Japan; - impediments to takeovers embedded in the nature of Japanese corporate governance and organization such as the keiretsu system; and, more generally, - an intrinsic scepticism amongst Japanese officials over the relative costs and benefits of inward FDI. Yet more recently, that closed and restrictive system has undergone a profound set of changes. The economic turmoil of the 1990s after the bursting of the so-called "bubble" economy, along with external pressure (gaiatsu) from the United States, has forced a fundamental rethinking of industrial policy, with Japan

Journal

Journal of World Investment and Trade – Brill

Published: Jan 1, 2003

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