Foreign direct investment of Japanese firms in the primary sector of Asian economies

This study examined empirically the main features of foreign direct investment of Japanese private firms(JDI) in the primary sector of Asian economies, and identified the determinants affecting the direction, magnitude and regional distribution of these investment flows, by estimating a set of investment functions and analyzing firm survey data. The movement of the aggregate JDI flows is found to be influenced primarily by exchange rates, firm's financing environment, and domestic business conditions, while change in the size of investing in the primary sector is more sensitive to exchange rates and cost factors. The investment inefficiency in Europe, North America, and Oceania is covered by the higher return in Asian area, which therefore become a key factor driving the resurgence of JDI flows to Asian economies.