ABSTRACT
This chapter examines in particular the record of US foreign direct investment (FDI) in Japan. Low levels of US FDI in Japan have had a number of negative consequences for Japanese and American interests alike. Many of the critical remedies depend upon changed Japanese business practices and government policies. In fact, even in electrical machinery and chemicals — two of the largest recipient FDI sectors in Japan — the capitalisation of foreign-affiliated firms accounted for just 2.9 per cent and 5 per cent respectively. In sum, at either the macroeconomic or microeconomic level, and from either the home or host country perspective, among major industrialised nations Japan has received an exceptionally small amount of direct investment from abroad. For additional examples of merger and acquisition difficulties encountered by foreign firms in Japan. The American government can act to improve significantly the environment for US direct investment in Japan.
