Japanese FDI in China: Determinants and Performance

38 Pages Posted: 23 Feb 2011

See all articles by Shiro Patrick Armstrong

Shiro Patrick Armstrong

Australian National University (ANU) - Crawford School of Public Policy

Date Written: 2009

Abstract

Japanese foreign direct investment (FDI) into China is analysed using an FDI model that accounts for different modes of FDI as well as third country effects and adds to existing literature by incorporating a new measurement of political distance. Political closeness between countries is shown to affect FDI. An improvement in political relations is associated with an increase in FDI by reducing uncertainty in the invest- ment environment. The performance of Japanese FDI into China is shown to be high relative to its potential since the late 1980s. The signing of the bilateral investment treaty in 1988 and China’s WTO accession in 2001 were events that helped reduce uncertainty in bilateral investment, with the latter mitigating the effects of increased uncertainty from rising bilateral political tensions after 2001.

Suggested Citation

Armstrong, Shiro Patrick, Japanese FDI in China: Determinants and Performance (2009). Crawford School Asia Pacific Economic Paper No. 378, Available at SSRN: https://ssrn.com/abstract=1767685 or http://dx.doi.org/10.2139/ssrn.1767685

Shiro Patrick Armstrong (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.crawford.anu.edu.au/staff/sarmstrong.php

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