Japan's response to globalization: learning from Japanese direct investment (original) (raw)
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Developing with Foreign Investment: Malaysia
The Australian Economic Review, 1995
Over the past two decades, there has been a decisive shift in trade and industty policy in developing countries (DCs) away from import substitution and towards export-orientation. A s part of this policy shift, an increasing number of DCs have become more receptive to foreign direct investment (FDI). Despite its policy relevance, the literature on the role of FDI in the export expansion of tnanufactured exports from DCs is sparse. This article attempts to fill this gap through a case study of the role of export-oriented FDI in Malaysia's rapid industrialisation. The overall conclusion of the article is that export-oriented FDI has brought significant returns to Malaysia principally because the general economic climate has been favourable f o r the internationalisation of production for a considerable period of time. * We thank David Johnson, Richard Pomfret and an anonymous referee for comments. We are also grateful to Anant Menon and Ong Hong Cheong for valuable discussions, and to Saleha Abdul Rahman and Choo Wai Meng from the Malaysian Industrial Development Authority (MIDA) for providing access to various unpublished data.
The Globalization of Japanese Manufacturing Corporations
Growth and Change, 1993
This paper discusses recent shifts in the overseas investment strategies of Japan's major multinational manufacturing companies (MNCs). Based on a survey of twenty corporations it is postulated that the move towards the globalization of these companies has taken place in three distinct but overlapping phases: (1) a linear link-up to Japan, (2) a transition stage, based upon international specialization and 'mesh' strategies. and (3) a tetra-polar strategic division of the world. The paper commences with a discussion of recent trends in MNC behavior, and then shows how overseas corporate organization has changed in the Japanese firms surveyed, especially after 1985. The implications of these changes among the major global regions is examined. The paper concludes with an assessment of whether the strategies of Japanese MNCs have converged with those. of United States or European MNCs, and to what degree they have retained their own distinctive attributes.
Processes and Achievements of Malaysia's Economic Globalization
Integration of the national economy with global economy is the natural outcome and the end result of economic development processes in any nation. In the political economy of the world with unequal nations and imperfect competition the north-pushed capitalist globalization is a suspect of deception for developing countries. The capitalist globalization is a project of market dogmatism founded on the Darwinist social philosophy of ‘survival of the fittest’ – the law of Jangle. It is inherently a scheme of yielding disproportionately large benefits for the efficient industrialized nations. This paper analyses the structure and management of Malaysia’s economic globalization and studies its achievements from national and international contexts. It has used a variety of econometric and statistical tools such as the augmented Dickey-Fuller test, Log-linear Regressions, Chow breakpoint test, and CUSUM test. The results reveal that globalization has made significant achievements in terms of most of the national macroeconomic goals. However, in terms of the international political economy it has failed unexpectedly. Results of the income convergence analyses show that it has failed to reduce Malaysia’s income gaps with USA and Japan, its two major trading and investment partners. It contradicts the general findings of the income convergence studies that the lower income industrializing countries are catching up to the higher income industrialized countries and slowly narrowing the income gap between them. This result, therefore, tends to suggest that even a guided and regulated globalization, like that of Malaysia, will have the tendency to yield relatively more benefits to the developed industrialized economic partners and contributes to the widening of the income gaps between them. The paper concludes that because of the blind eye of globalization to the needs and aspirations of the developing economies, these countries must pursue globalization only, cautiously, rationally, selectively, and never wholeheartedly.
U.S. and Japanese Foreign Direct Investment in East Asia: A Comparative Analysis
Policy Studies Journal, 2008
East Asia has led the world in economic growth and export expansion in recent decades. The phenomenal rate of economic growth among the so-called "four little tigers"-Hong Kong, Singapore, South Korea, and Taiwan-enabled them to achieve newly industrializing country (NIC) status in the 1980s, followed by Indonesia, Malaysia, and Thailand. Earlier studies explained the development from the government-led development paradigm, or the so-called the statist approach. Scholars also argue that foreign direct investment (FDI) played an important role in the economic development, thanks to technology transfers. Kojima and Ozawa and later Kohama, however, argue that Japanese FDI help East Asian economies while U.S. FDI do not because Japanese technology transfer practices are appropriate for East Asian countries but not the United States'. Thus, we revisit the issue of East Asian economic development and test the economic effects of FDI from the United States and Japan. Using a Barro-type growth model, we test the effects of FDI from the United States and Japan on economic growth in East Asian NICs. We find that FDI from both the United States and Japan helped economic growth in the "four little tigers," but not in Indonesia, Malaysia, and Thailand.
2003
It is always exciting when a doctoral work is published, especially when comprehensive treatment of a topic is long overdue. Transnational Corporations, Technology and Economic Development: Backward Linkages and Knowledge Transfer in South East Asia takes a refreshingly 'hands-on' approach to an issue that has been around as long as multinationals themselves; that is, their impact on the host countries/industries in which they operate. The focus of this work is the electrical and electronics sector in Malaysia. The purpose of the book is twofold: first, to assess the extent of knowledge transfer from foreign subsidiaries via backward linkages with suppliers; and second, to determine the factors that influence the degree to which this knowledge is transferred. In contrast to most previous research viewing spillovers from backward linkages at a macro level, this book takes a firm-level approach. The book begins by giving a brief background to the research, highlighting the importance of understanding the impact of foreign direct investment (FDI) on a case-by-case (country-by-country) basis, and emphasizing the need to study emerging economies in Asia. Chapter Two presents the theoretical framework, drawing on a number of complementary research streams and disciplines. Chapter Three provides the reader with an overview of the extant literature on the impact of FDI, by region, focussing on the impacts resulting from backward linkages. It also carefully considers the evidence relating to the determinants of knowledge transfer via backward linkages. A number of research propositions guiding the study are put forward in this chapter. Chapter Four looks specifically at the Malaysian context, discussing the use of policy as a tool for encouraging beneficial linkage formation. General trends in inward and outward investment for Malaysia are presented, before the discussion turns more specifically to the electrical and electronics sector. Chapter Five presents the research questions and methodology, while Chapters Six and Seven present the data from the survey and interviews conducted in Malaysia, and Chapter Eight concludes. The book makes a number of commendable contributions. First, the study recognizes from the outset that although previous research has shown a
International Business Review, 2000
The role of Japanese Transnational Corporations (TNCs) in the economic development of the host Southeast Asian countries is at the heart of contemporary discussion on knowledge transfer. This paper is an empirical analysis of the existence of knowledge transfer from Japanese TNCs to their local suppliers in the Malaysian Electrical and Electronics sector. A logistic regression model enables to define the factors that determine the existence of knowledge transfer between Japanese affiliates and their local suppliers.
The role of Japanese Foreign Direct Investm in production networks in Mexico and Thailand. The Transport Equipment Sector, 2014
IN THE PAST FEW DECADES the organization of production by Multinationals (MNs), owing to advances in information technology and lowering costs in transportation as well as the proliferation of bilateral and regional Free Trade Agreements (FTAs), has been characterized by the fragmentation of the process of production. This has lead to a major change in the nature of trade as more intermediate goods (parts and components) are being exchanged intensively among countries reflecting the integration of production networks intra-regions and to a lesser extent, inter-regions. Another important aspect of the new patterns of trade and investment is the greater role that emergent economies are taking on them and the impact that their involvement in the international economy is having on their development.
FDI and REGIONAL INTEGRATION: The Role of Japanese Multinational Corporations
In the early postwar era, Japanese FDI was relatively modest and limited mainly to the extractive and labor-intensive industries. During the five year period from the 1985 Plaza Accord to 1990, however, the amount and cases of Japanese FDI nearly doubles the totals of the previous 35 years, covering a broader range of industries. Since much has been written about Japanese production networks before 1997, my paper is a simple exploratory study on the changes in Japanese international production networks after the Asian Crisis and the implications this may have for regional integration. It is still too early to distinguish between recovery measures and broader organization changes. Therefore, I provide three before-and-after snapshots of Japanese foreign direct investments (FDI) in order to take a first cut at this issue. First, I examine the recent trends in and distribution of Japanese FDI and the resulting horizontal division of labor that has emerged among the Asia-Pacific economi...