Go Global to Japan: Analysis of Inward FDI Distribution

For many years, Japan has attracted exceptionally low levels of Foreign Direct Investment. This study sets out to provide a better understanding of the activity of foreign affiliates in Japan, and suggests strategies Japanese policy makers may undertake to optimize the potential for positive spillover effects from Foreign Direct Investment in the future. Using firm-level data, the pattern of distribution of capital and labor of foreign affiliates operating in Japan is presented and analyzed. From 1999 to 2008, foreign affiliates have grown rapidly in numbers, paid capital and number of employees. Nevertheless, dynamics differ between foreign affiliates depending on their origin, position in relation with international trade flows, the nature of the activity they undertake and their place within the organizational structure of their parent multinational company.