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Published online by Cambridge University Press: 13 June 2011
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.
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.
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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.
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