No CrossRef data available.
Article contents
Japan's Multinational Enterprise: The Political Economy of Outward Dependency
Published online by Cambridge University Press: 13 June 2011
Abstract
Japan has suddenly emerged as a powerful home country for multinational corporations, offering a new form of competition in the world market. She is making all-out efforts to set up manufacturing operations overseas, in addition to ventures in extractive industries in which Japan, as a resource-poor country, is naturally interested. For a number of reasons, Japan has taken up direct overseas production as a national desideratum, even though the majority of individual firms are not ready to do so on their own. A variety of governmental measures have been taken to defray part of the private costs and to realize the social benefits of overseas investment. The article explores how and why Japanese industry has suddenly gone multinational; it examines the sources of competitiveness in this new form of international economic activity, and points out that overseas investment is now an integral part of Japan's strategy for economic growth and of her foreign economic diplomacy.
- Type
- Research Article
- Information
- Copyright
- Copyright © Trustees of Princeton University 1978
References
1 It is estimated that at the end of 1974 the cumulative value of Japan's overseas investments approved by the government stood at $12.7 billion, while the United States had approximately $118.6 billion worth of overseas capital stock, Great Britain $32.6 billion, and West Germany $15.3 billion. Japanese Ministry of International Trade and Industry (MITI), 7976 Wagakuni Kigyo no Kaigai Jigyo Katsudo [Overseas Business Activities of Our National Enterprises] (Tokyo 1976), 139Google Scholar.
2 MITI, 1976 Tsusho Hakusho [White Paper on International Trade] (Tokyo 1976), 294–95Google Scholar. The average annual growth rate over the period 1967–1974, for example, is estimated to have been 31.4% for Japan, 26.1% for West Germany, 10.7% for Canada, 10.4% for the United States, 9.9% for France, and 9.3% for Great Britain.
3 According to a statistical study made by Roemer, John E., what he calls a “G-share” (an indicator of international competitiveness consisting of “internationally oriented domestic capital stock” and “book value of foreign direct investment in manufacturing”) declined, over the period 1960–1971, from 43.6% to 35.4% for the United States and from 28.7% to 20.7% for Britain. Over the same period, it increased from 8.8% to 14.8% for Japan and from 18.9% to 28.8% for West Germany. See U.S.-Japanese Competition in International Markets, Institute of International Studies, University of California (Berkeley 1975), 149Google Scholar.
4 MITI (fn. 2), 296–97.
5 Kiyoshi Kojima also emphasizes a macroeconomic analysis, but his analysis is in a different framework; see “A Macroeconomic Approach to Foreign Direct Investment,” Hitotsubashi Journal of Economics, XIV (June 1973), 1–20Google Scholar. A further elaboration of the Kojima model is presented in Ozawa, “International Investment and Industrial Struc-ture: New Theoretical Implications from the Japanese Experience,” Oxford Economic Papers, November 1978.
6 Hicks, , “The Mainspring of Economic Growth” (Nobel Memorial Lecture), Swedish Journal of Economics, Vol. 75 (December 1973), 336–48CrossRefGoogle Scholar; and “The Future of Industrialism,” International Affairs, Vol. 50 (April 1974), 218–29Google Scholar. A theoretical examination of the impulse concept is also presented in Hicks, , Capital and Time: A Neo-Austrian Theory (Oxford: Clarendon Press 1973)Google Scholar, chap. 10.
7 Hicks, “The Future of Industrialism,” (fn. 6), 218–19.
8 Ozawa, , Japan's Technological Challenge to the West, 1950–1974 (Cambridge: The M.I.T. Press 1974)Google Scholar.
9 Kazushi Ohkawa and Henry Rosovsky, Japanese Economic Growth: Trend Acceleration in the Twentieth Century (Stanford: Stanford University Press 1973)Google Scholar.
10 Both supply and demand in the industrial labor market contributed to this development. First of all, Japan's overall population has become older, with a drop in the absolute number of 15- to 10-year-olds in the labor force, which had earlier been bol-stered by the “baby boom” of the early postwar period. This age group declined from 12.4% of the total labor force in 1955 to 5.7% in 1970. Furthermore, rising incomes and Japan's traditional system of corporate promotion based on educational background encouraged an ever-increasing number of young people to seek a higher education. For example, the percentage of junior high school graduates who entered employment declined from 38.6% in i960 to 18.7% in 1969; the ratio also dropped for senior high school graduates, from 61.3% to 58.9%.
At the same time, Japan's economic growth brought about a surge in the demand for young workers who were highly adaptable, both physically and mentally, to modern industrial operations. Thus the labor market for young workers became tighter than that for any other age-group. See Ozawa, , “Multinationalism, Japanese Style,” Columbia journal of World Business, VII (November-December 1972), 33–42Google Scholar.
11 The decline in NNW is referred to by Bennett, John W. and Levine, Solomon B., “Industrialization and Social Deprivation: Welfare, Environment, and the Postindustrial Society in Japan,” in Patrick, Hugh, ed.,Japanese Industrialization and Its Social Consequences (Berkeley: University of California Press 1976), 447Google Scholar.
12 MITI (fn. 1), 106.
13 For a discussion of Japan's resource diplomacy, see Okita, Saburo, “Natural Resource Dependency and Japanese Foreign Policy,” Foreign Affairs, Vol. 52 (July 1973), 714–24CrossRefGoogle Scholar; Ozawa, , “Japan's Resource Dependency and Overseas Investment,” Journal of World Trade Law, XI (January-February 1977), 52–73Google Scholar.
14 Johnson, “Economic Benefits of the Multinational Enterprise,” in Hahlo, H. R., Smith, J. Graham, and Wright, Richard W., eds., Nationalism and the Multinational Enterprise: Legal, Economic and Managerial Aspects (Dobbs Ferry, N.Y.: Oceana Publications 1973), 165–66Google Scholar.
15 Hymer, , “The Multinational Corporation and the Law of Uneven Development,” in Bhagwati, Jagdish N., ed., Economics and World Order from the igyo's to the 1990's (New York: Collier-Macmillan 1972), 113–40Google Scholar.
16 Caves, , “Industrial Organization,” in Dunning, John H., ed., Economic Analysis and the Multinational Enterprise (London: Allen & Unwin 1974), 130Google Scholar.
17 Horst, , “Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study,” Review of Economics and Statistics, Vol. 54 (August 1972), 258–66CrossRefGoogle Scholar.
18 Galbraith, , Economics and the Public Purposes (Boston: Houghton Mifflin 1973)Google Scholar.
19 Ibid., 169–70.
20 Japanese Agency of Small and Medium Enterprises, 1975 Chusho Kigyo Hakusho [White Paper on Small and Medium Enterprises] (Tokyo 1975), 284Google Scholar.
21 MITI, Kaigai Keizai Kyoryo\u no Genjo to Mondaiten [Present Conditions and Problems of Overseas Economic Cooperation], 1973; summarized in “Japan's Economic Cooperation: Its Present State and Problems,” Oriental Economist, XLIII (January 1975), 17Google Scholar.
22 Mikesell, , The Economics of Foreign Aid (Chicago: Aldine 1968), 194Google Scholar. Hasegawa, Sukehiro, in Japanese Foreign Aid: Policy and Practice (New York: Praeger 1975)Google Scholar, points out the strong ethnocentric nature of Japan's economic aid.
23 Economic Planning Agency, Japanese Government, Economic Survey of Japan (1971–1972) (Tokyo: Japan Times 1972), 116–17Google Scholar.
24 A concise examination of Japan's economic cooperation policies is presented by Caldwell, J. Alexander, “The Evolution of Japanese Economic Cooperation, 1950–1970,” in Malmgren, Harold B., ed., Pacific Basin Development: The American Interests (Lexington, Mass.: D.C. Heath 1972), 23–60Google Scholar. See also Seiji Naya and Richard Schatz, “Trade, Investment, and Aid: The Role of the U.S. and Japan in Asian Economic Development,” ibid., 61–80.
25 Ozawa, “Japan's Mid-East Economic Diplomacy,” Columbia Journal of World Business, IX (Fall 1974), 38–46Google Scholar.
26 Oriental Economist (in. 21), 17.
27 Ibid., 19.
28 MITI (fn. 2), 268.
29 MITI (fn. 1), 25; survey based on replies by 1,194 firms accounting for 78.4% of the total value of overseas security investments made by Japanese firms as of March 31, 1975.
30 MITI, 1975 Wagakuni Kigyo no Kaigai Jigyo Katsudo (Tokyo 1975), 232Google Scholar.
31 Heller, H. Robert and Heller, Emily E., Japanese Investments in the United States: With a Case Study of the Hawaiian Experience (New York: Praeger 1974), 51Google Scholar.
32 MITI survey reported in Asahi Shimbun, April I, 1976, p. 9Google Scholar.
33 Young, Alexander K., “Internationalization of the Japanese General Trading Companies,” Columbia Journal of World Business, IX (Spring 1974), 78–86Google Scholar.
34 Keizai, Toyo, Kaigai Shinshutsu Kigyo Soran [Japanese Multinationals—Facts and Figures] (Tokyo 1976), 2Google Scholar.
35 MITI, 7974 Wagakuni Kigyo no Kaigai jigyo Katsudo (Tokyo 1974), 44–46Google Scholar.
36 Barnet, Richaid J. and Muller, Ronald E., Global Reach: The Power of the Multinational Corporations (New York: Simon and Schuster 1974), 202–3.Google Scholar
37 Computed from the results of a MITI survey made in 1975. MITI (fn. 1), 157–60.
38 Computed from 1967 data based on 187 U.S.-controlled multinational enterprises. Vaupel, James W. and Curhan, Joan P., quoted in Vernon, Raymond, Sovereignty at Bay (New York: Basic Books 1971), 141Google Scholar.
39 Behrman, Jack N., “The Multinational Enterprise in 1976 and After,” in Sethi, S. Prakash and Holton, Richard H., eds., Management of the Multinationals: Policies, Operations, and Research (New York: Free Press 1974), 21Google Scholar.
40 Gilpin, Robert, U.S. Power and the Multinational Corporation (New York: Basic Books 1975), 41CrossRefGoogle Scholar.