japanesetradeandforeigndirectinvestmentintheasia-.ppt

Japan’s Outward FDI in Globalization Daisuke Hiratsuka Director General of Development Studies Center Institute of Developing Economies, JETRO 81-43-299-9676, Fax. 81-43-299-9763 daisuke_hiratsuka@ide.go.jp What does determine outward FDI? New Asian economic landscape Distribution of Japan’s outward FDI Japan’s outward FDI inside Asia Evolution of global presence by Japanese firms International expansion by Japanese SMEs Perspective of Japanese outward FDI in further economic integration Production process is becoming sequential stages of production, and instead of final products, parts and components within the same industry are traded. Assuming the two country case, a good across border four times: at the exported from the country A; imported into the country B; exported from the country B after processing , and imported back to the country A. In the actual sequential production, one good crosses borders many times to produce a final good. It implies that the reduction of trade costs, such as trade liberalization and facilitation measures, would develop the sequential production, increasing FDI flows. In the mid 1980s, SMEs who afforded enough had in human resources and capitals, went to overseas, in particular to ASEAN, exporting back goods to Japan. SMEs have suffered from the decreasing demands. As a breakthrough in severe business environments, Japanese SMEs have advanced to operate in Asia, in order to participate in the production networks. After the China’s entry in WTO in 2001, a large number of SMEs have advanced to China, seeking market. SMEs have at least two overseas production sites; one in ASEAN and another in China. Japan will increase investment in Japan; the so-called “return to Japan.” Production and distribution networks have been self-organizing, meaning that Japan will continue outward FDI at high level. But, the presence of Japan’s FDI in Asia will be down, because most of Japan’s FDIs are the expansion of existing facilities, meanwh