Earlier this year, NHK aired the three-part TV program "Made in Japan," which dramatized an electronics company's struggle to survive tough economic times. While fictional, the story detailed the harsh reality Japan Inc. faces from Chinese competition.
But was the drama in fact a reality TV show? With the Upper House election over, talk about "Abenomics" has shifted to Prime Minister Shinzo Abe's so-called third arrow, i.e. structural economic reforms. And one factor missing from the discussion is the role of foreign direct investment.
Japan's inward FDI as share of GDP stands at a meager 4 percent. It is clearly lagging its G-7 peers, who are in double-digit figures, and is even dwarfed by North Korea's FDI ratio of 12.5 percent. Since inward FDI is an indicator of an economy's openness and attractiveness, there is no way Abe's government will be able to conduct fundamental reform without taking the power of foreign investment into account.
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