chapter  4
Japanese direct investment in the United States manufacturing sector
ByNeil Reid
Pages 30

Japanese foreign direct investment (FDI)1 has grown at an astonishing rate since the early 1970s (Heller and Heller 1974; Roemer 1976; Yoshino 1976; Ozawa 1979; Sekiguchi 1979; Dicken 1980, 1983, 1988; Allen 1981; Marsh 1983; Tsukazaki 1987; Japan External Trade Organisation (JETRO) 1988; Morris 1988). In recent years North America, particularly the United States, has become a major destination for much of this investment. In 1986, for example, North America received over $10 billion of Japanese FDI, which represented almost 47 per cent of Japan’s FDI for that year (Tsukazaki 1987). Although the majority of Japanese direct investment in the US economy is in nonmanufacturing sectors (see Table 4.5), manufacturing investment is an important component of Japanese direct investment in the US. By the end of 1987 over 180,000 Americans were employed in 945 US-based Japanese manufacturing plants. Of these 945 plants, 383 (40.6 per cent) were either acquired or constructed in the two years of 1986 and 1987 alone. Thus, the growth of Japanese direct investment in the US manufacturing sector has been particulary explosive in recent years. The very recent nature of the majority of Japanese direct manufacturing investment in the US economy means that relatively little is known, for example, about either its current sectoral or geographic distribution. The purpose of this chapter is to bring our knowledge of Japanese direct investment in the US manufacturing sector as up to date as possible. This will be achieved by utilizing the most comprehensive data bases on Japanese direct investment in the US manufacturing sector currently in existence. These are Japan’s Expanding US Manufacturing Presence: 1986 Benchmark Survey and Japan’s Expanding US Manufacturing Presence: 1987 Update, recently published by the Japan Economic Institute in Washington, D.C.2