Japanese Multinationals in Asia: Capabilities and Motivations

Japanese Multinationals in Asia: Capabilities and Motivations

Author: 
Dasgupta, Susmita
Place: 
Washington, D. C.
Publisher: 
World Bank Group
Date published: 
1999
Record type: 
Responsibility: 
Mody, Ashoka, jt. author
Sinha, Sarbajit, jt. author
Abstract: 

The intangible assets conducive to foreign investment derive not from research but from marketing networks and production skills. The factors most affecting foreign investment in Asia include the human capital of the hosts, the behavior of competitors, and whether earnings can be repatriated. The greater and more diverse the investment, the greater the interest in low wages. Using a specially designed survey, Dasgupta, Mody, and Sinha identify the characteristics of Japanese firms likely to invest worldwide 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 do 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 hosts, 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. This paper -- a product of the Office of the Regional Vice President, East Asia and Pacific Regional Office -- is based on a survey conducted through the Japanese Ministry of International Trade and Industry in March 1993.

Language: 

CITATION: Dasgupta, Susmita. Japanese Multinationals in Asia: Capabilities and Motivations . Washington, D. C. : World Bank Group , 1999. - Available at: http://library.au.int/japanese-multinationals-asia-capabilities-and-motivations