FDI Flows into Japan: Changing Trends and Patterns Smitha Francis

This paper argues that the rising prominence of FDI inflows into Japan – a traditional top global outward investor, portends a significant element of the overall changes taking place in global FDI trends and has to be seen against the backdrop of the historically sweeping reforms in Japan’s financial and corporate sector laws. The latter has been undertaken largely in response to the external pressures following the financial liberalisation-linked asset bubble burst and the subsequent protracted recession of the 1990s. The rising foreign participation suggests ownership changes in the domestic corporate and financial sector as well as changes in Japan’s traditional bank-based corporate financing practices, which, in turn, are bound to have implications for Japanese firms’ positioning as outward investors.

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