ABSTRACT
In this chapter, the author identifies basic characteristics of Japanese direct investment and examines factors bringing forth these characteristics. Japanese direct investment was only a small portion of global direct investment until the end of the 1960s. To determine in what regions and industries Japanese foreign direct investment increased most in the 1970s, he divide the postwar period into two subperiods: 1951–1971 and 1972–1981. An infant-industry protection policy by means of restricting imports and directing investment inward played a central role in the enrichment of the industrial structure. The rapid economic growth and drastic change in industrial structure that Japan experienced in the postwar period are an important element for understanding the basic mechanism of Japanese foreign direct investment. The most distinctive feature of Japanese direct investment in the commerce sector is the role played by general trading companies. Commerce activities in foreign countries are subject to various types of economies of scale and economies of scope.
