Japanese and U.S. firms as foreign investors: do they march to the same tune?

Japanese firms emerged as a major presence on the international scene with substantial new investments in the mid-1980s and have contributed in a significant way to the large investment flows since then (Figure 3.1). The flows of Japanese investment almost quadrupled between 1985 and 1988, stabilizing at those high levels in 1989 and 1990. Over the same period, U.S. investments also rose, approximately doubling between 1985 and 1988. The outstanding stock of Japanese foreign investment remains lower in absolute value than that of the United States-the dominant international investor-but has almost caught up in relative terms. According to the Japan External Trade Organization, one-fifth of production by Japanese firms is located overseas, compared with 25 percent for U.S. firms.