NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Japanese Foreign Direct Investment

Kenneth A. Froot

NBER Working Paper No. 3737
Issued in June 1991
NBER Program(s):   ITI   ME   IFM

Japan's outflows of foreign direct investment (FDI) have increased dramatically in recent years, to the point where Japan has become the world's largest overseas direct investor. This paper documents the increase in Japanese FDI, as well as its breakdown across industries and countries. Investments in real estate and financial services have grown most rapidly, as has Japanese FDI into North America, which now accounts for fully half of Japan's outflows. The paper then goes on to discuss and evaluate some of the most popular explanations for this explosion in investment: Japanese current account surpluses; actual or anticipated protectionism abroad; appreciated stock prices and value of the yen; and changes in international tax policy.

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Document Object Identifier (DOI): 10.3386/w3737

Published: US-Japan Economic Forum, Feldstein and Kosai, eds., 1991

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