Open Society, Closed Market?: Japan’s Integration into the Global Economy and the Crisis of 2008–2009

AbstractIt appears that Japan pursues a lopsided internationalization strategy—keeping foreign companies out while at the same time investing massively in foreign markets. This paper examines whether this is an appropriate position. First, we look into the foreign direct investment issue and try to understand the current situation in Japan. In particular, we analyze the underlying two-fold assumption: (a) that there are international companies willing and able to make large investments in Japan, and (b) that they cannot do it because the Japanese market is closed. The ratio of inbound FDI (foreign direct investment) to GDP is considerably lower in Japan than in other major industrialized nations, and Japanese companies directly invest four times as much abroad as foreign companies invest in Japan. This does not mean, however, that the Japanese market is closed. In fact, companies are deciding to invest in other countries where conditions are (or are perceived to be) more conducive to penetration. Second, ...