International Investment and Japan Essay Example For Students

International Investment and Japan Essay Political IndicatorsPolitical StabilityRating:2005:12345672010:1234567Analysis:Japans current domestic goal is to strengthen the political party system. In recent years, a series of scandals have damaged the integrity of not only individual politicians, but also entire parties (Fraser). Since the 1970s, there have been several changes in the government due to all the scandals. Since 1996, stability has been restored to the political system due to the election of Ryuturo Hashimoto (Fraser). Japans government strongly distanced itself from communist countries during the Cold War but now currently has ties to several Asian countries. Lately Japan has developed a more westernized approach in regards to its political system, and things will continue to get better due to an increased public trust in the current majority, the liberal democrats. Even though Japan has a multi-party system, it has generally been dominated recently by this party. The government is divided into three branches, a nd the liberal democrats hold a majority of the seats in the legislative branch (Fraser). Japan will continue to incorporate a more global approach to its policies and model their political structures and policies on the west. This has worked as no major scandals have occurred in the past ten years, and politics there will become more stable. Public Policies Impacting Foreign Direct InvestmentRating:2005:12345672010:1234567Analysis:All the major policies regarding business in Japan are decided by 12 ministries in Tokyo, and then local governments implement them (1996 Country Commercial Guide). They have power over the Japanese economy with the thousands of required licenses, permits, and approvals that regulate business there. Although Japanese businesses have prospered for many years in a tightly regulated environment, in Japans current recession, they are now calling for deregulation because they can deal with foreign competition and that the governments over-regulation is only protecting inefficient small companies while forcing manufacturing to move offshore (1996 Country Commercial Guide). American companies initially start at a disadvantage in Japan, but become successful after a short period of time when a presence has been established. A little over 200 of the U.S. Fortune 500 companies have a direct investment in Japan, and 45 of the 50 leading exporters in the U.S. do so as well (1996 Country Commercial Guide). The government in Japan has removed most of the legal restrictions on exports to and from the foreign investment there and is currently seeking ways to increase this trade (1996 Country Commercial Guide). The U.S. and Japanese governments continue to work on removing anti-competitive and exclusionary business practices through bilateral dialogue (1996 Country Commercial Guide). The average tariff in Japan is now one of the worlds lowest. The country expanded their list of duty-free manufactured products by 2400 items out of 7000 items listed on the tariff schedule (1996 Country Commercial Guide). In addition to customs, there is a 3% tax on all goods sold i n Japan and payment is required at the time of import. The statistics prove that U.S. firms in Japan are very successful; this trend will most definitely continue as relations between the two countries will only get better. Views of Political LeadersRating:2005:12345672010:1234567Analysis:Japan has several major political parties with differing views including the: Liberal Democratic Party, Democratic Party, Social Democratic Party, Liberal Party, Communist Party, Heiwa Kaikuku, Komei, and Sakigake (Ito). Liberal Democratic Party:This has been the most dominant party in the last 40 years. Despite the name, the party is conservative and protects business interests. The LDP controls 101 seats in the upper house and 263 in the lower house (Ito). Democratic Party:The Democratic Party is the largest opposition of Japans bicameral system. They are interested in seeking more open markets, greater deregulation and tax cuts. The Democratic Party has 47 seats in the upper house and 92 in the lower house (Ito). Social Democratic Party:This political group is strongly opposed to the Liberal Democratic Party with views on expanding Japans military role and strengthening relations between the U.S. Support for the party was gained through unions, but they have recently waned; seats in the upper house are 13 while having 15 in the lower house (Ito). Liberal Party:The Liberal Party believes in deregulation and more of a participation in government affairs controlling 12 seats in the upper house and 40 in the lower house (Ito). Communist Party, Heiwa, Kaikuku, Komei, Sakigake:These parties have few seats in Japans bicameral legislative system whose views are independent of other major parties. The political system and views of Japan are similar to those of the United States, except for the fact that they have more active parties in power, with one holding a very large majority, the Liberal Democratic Party. Having such a dominant party is not good for change, but Japan has maintained government stability and should continue to do so for years to come. Major Political EventsRating:2005:12345672010:1234567Analysis:The realignment of the Japanese political system, which began in the early 90s, is continuing today and is the only major political event that has changed the face of Japanese politics. It will probably take several years before all the consequences of the new electoral system for the Lower House of the National Diet make itself felt (1996 Country Commercial Guide). Most believe that Japan will continue to be governed by coalitions as the political landscape continues to evolve. The Liberal Democratic Party has been in control for about ten years and continues to introduce conservative bills catering to interests of businesses. The political landscape looks to remain stable for several years. DemocracyRating:2005:12345672010:1234567Analysis:Japan has a very strong democratic system because it believes in respecting human rights much like the United States. The role of the Emperor is merely symbolic such as the Queen of England. A parliamentary form of government exists in Japan with a head of government, the prime minister which is elected by parliament, and the National Diet (1996 Country Commercial Guide). Elections for the prime minister take place in the Lower House, the more powerful legislative house, and are held once every four years (1996 Country Commercial Guide). Upper house elections are every three years. Citizens of Japan do not have a say in the selection of the prime minister or elections in the National Diet. However, politicians respect the values and beliefs of individuals and this trust is what guides them. Of course, corruption occurs in Japan just as it does in the United States, and politicians in the U.S. are supposed to carry out the wishes of citizens just like Japan. Tensions between U.S. and JapanRating:2005:12345672010:1234567Analysis:The relationship with Japan and the United States is characterized by a close cooperation on many important issues and is anchored by the U.S. Japan Security Treaty (1996 Country Commercial). The policies of Japan compliment those of the United States. These two countries are currently working together to tackle problems such as AIDS, growth of the population, and environment protection. Excellent relations exist between Japan and the U.S. and they will only get closer. Support for Current GovernmentRating:2005:12345672010:1234567Analysi s:The only series of movements that were due to distrust of government policies occurred in the 60s and 70 when Japan was growing at a phenomenal rate which caused severe pollution (McCargo 146). Government acted quickly to impose laws restricting pollution and catered to the needs of the people. By the time the 1980s came, the government was clearly supported. In the mid-1980s, the Liberal Democratic Party had acted to make accommodations for citizens by adjusting policies for everyones best interest (McCargo 148). Since the late 80s there have been little to no protests against the government, due to them hearing citizens issues and acting upon them quickly. A trust has been created between the people and the government, and it still continues today. Influence of Anti-Business GroupsRating:2005:12345672010:1234567Analysis:The economy is doing very well in Japan, therefore there are not many anti-business groups. The majority LDP party supports the interests of business and so do most of the other political parties in Japan (Ito). Once again loyalty comes into play as it is part of Japanese culture; citizens are loyal to government as government is loyal to citizens. Businesses provide individuals with lifelong job and acceptable living conditions. This trend has occurred several years ago and will definitely continue in the future as long as the Japanese economy is stable. Public Opinion of Foreign OwnershipRating:2005:12345672010:1234567Analysis:Japanese are open to FDI and the government has liberalized the process. In 1991, the government of Japan amended several foreign trade laws so businesses do not need prior notification for non-restricted industries but the same rules apply to restricted industries such as the petroleum industry (1996 Country Commercial Guide). In the sectors that require prior notification, the Japanese government can restrict the entrance of foreign business if it feels that it will affect the performance of the economy. Business parks in Tokyo, Osaka, and Nagoya constantly seek opportunities of foreign businesses. Also, in 1994, several laws were changed to encourage foreign retailers in Japan which included the changing of the closing time, the raising of a reporting obligation from 500 square meters to 1000 square meters, and a reduction of the number of annual closing days (1996 Country Commercial Guide). Since land is s carce, there are still restrictions on foreigners acquiring land and real estate; lease and rental of existing buildings is preferred. Another investment incentive is the lenience of government towards business tax treatment. The people of Japan support foreign investment because it encourages business and provides several employment opportunities. Japan has grown to what it is today also due to the fact that firms have invested in the country, and in order to keep business growing in Japan, FDI needs to be encouraged. The Japanese government and citizens will continue to support FDI for a long time to come. External Threats of WarRating:2005:12345672010:1234567Analysis:Japan is reshaping its military forces as it attempts to tackle a perceived nuclear threat from North Korea and strengthen its role in multinational peacekeeping operations (Tiron). Due to this, parliament recently passed a series of bills that gave the government an increase of power in military emergencies. North Korea has the ability to launch nuclear warheads at Japan, and has previously launched tests over Japans airspace. Japan is currently devising a military expansion plan that could be used to help defend the country against North Korea or China (Brooke). These countries are both sensitive to this idea. Toshiyuki Shikata, a defense analyst says that the major threats at the moment are guerillas, refugees, or missiles from North Korea as well as terrorism and also the long term interests of Japan and China will collide (Brooke). China has nothing to gain from an attack on Japan, due to Japan being a major investor in the country, but conflict may arise over the island of Taiwan (Cortazzi). The country may not have an immediate threat of war, but failing talks with North Korea to cease their nuclear program are not a good sign. The U.S. will protect Japan under a nuclear attack, but since the stakes are extremely large, danger remains unpredictable. Economic IndicatorsEconomic Growth RatesRating:2005:12345672010:1234567Analysis:As of January 4th, 2004, Japans GDP growth was 2.3% (Global Statistics). Japan had a very strong economic growth period from the 60s all the way up to the 80s, but it slowed severely in the 90s (1.7%) due to overinvestment. The government tried to revive the economy, but that failed due to the global recession from 2000-2003. The economic growth rate of 2004 in Japan was the highest recorded since 1996, but that was due to an exceptional 1st quarter, but a lackluster 2nd, 3rd, and 4th quarter (Jones). The factor that is currently helping Japan is the double digit rises in exports that began in 2003. The positive effect of rising exports on profits has been magnified by corporate restructuring that has reduced costs, particularly through cuts in employment and wages, and improved balance sheets boosting profits in 2002-2003 with more gains in 2004 (Jones). These improved conditions have driven investment u p to 6% (Jones). MBA Admissionss - My Three Most Substantial EssayThe Koreans are the largest ethnic minority in Japan. Japanese firms refuse jobs to Koreans due to their foreign citizenship and are immediately expelled or dismissed when discovered (Yi). More discrimination occurs with the Koreans and the police, and entrance to schools, therefore bringing about a high unemployment rate among them. Even though Japan has a past of discrimination, they have recently passed some new laws making certain practices illegal, but inequity still exists today and will most likely continue to exist in the future since most of the Japanese favor a homogenous society. Continued pressure from the UN will make them pass new laws against the profiling. Social CohesionRating:2005:12345672010:1234567Analysis:There is no main problem in the social cohesion of the Japanese. There are low divorce rates, exceptional longevity, cost-effective health care and welfare systems, a high degree of popular satisfaction, widespread self-identification as middle class, an increasing recognition of womens roles in the workforce, improving conditions for minority groups, and growing internationalization (McCargo 77-78). Most Japanese people reject a class based system and roughly 75% identify themselves as middle class. Individuals in Japan highly praise merit as well. Considering there is no main problem in Japan between groups of people, there remains little disagreement since most are satisfied with their lives. This trend will continue to exist. Quality of LifeRating:2005:12345672010:1234567Analysis:The Japanese have exceptional longevity, with life expectancy at birth to be 81.04 years, the fourth highest in the world (Central Intelligence Agency). The country is also ranked as the fourth most developed country in the world (Byrnes). Japan is a very dense country with 333 people per square mile as opposed to the United States with 28 people per square mile (Byrnes). On average, retail prices in New York are only 75% of what they are in Japan, making the country very expensive. People in the United States also have a larger average for housing floor space with 691 square feet compared to 323 square feet. Japan fares worse than the U.S. in these factors: per capita GDP, amount of leisure time, housing conditions, and social conditions; other aspects make it better than the U.S.: affordable public transportation, less crime, lower infant mortality rates, less family income inequality, lower divorce rates, and better health ins urance (Byrnes). About 75% of people are currently satisfied with their life while about 25% are dissatisfied. Given future trends, it looks like the satisfied number will grow smaller. Japanese are also changing their diets which will result in more cardiovascular disease along with higher smoking rates in young women. If Japanese life expectancy and low birthrate continue, the country will have only half of its present population at the end of the 21st century (McCargo 75). The population is also aging very quickly due to an ever growing elderly population. Family StabilityRating:2005:12345672010:1234567Analysis:Traditionally Japan has an extended family structure, making it common for three generations to live in the same household. They live in much more crowded conditions than in Europe and North America. The average ages of marriage of the Japanese have risen from 26.6 for men and 23.8 for women in 1955, to 29.4 for men and 27.6 for women in 2003 (McCargo 62). Dropout rate for high school students in Japan is only 2.2% (McCargo 62). The country also has a very low birthrate at only 9.56 births per 1000 people, and it keeps declining yearly (Central Intelligence Agency). Japans number of divorces in 2003 were 283,906, or 2.25 per 100 people as opposed to 5.9 per 1000 people for marriages. (Statistical Handbook of Japan) Trends show that the number of households in Japan have increased from 30,297 in 1970 to 46,782 in 2000, but members per household have decreased due to the low birthrates and aging of the population (Statistical handbook of Japan). Overall, these statistics are right on track with more developed and industrialized societies, and are fairly stable. BriberyRating:2005:12345672010:1234567Analysis:According to statistics in 1997, about 170 government officials were under arrest, 150 of which were accused of taking bribes (Hasegawa). Cases in which public officials are involved with bribery are few but most bribery instances are carefully planned. When nominations are made on bids for government contracts, the contractors usually bribe the government officials for a more favorable chance. Even though much bribery exists, Japan has a special investigation department which tries to interrupt bribes that are in progress as well as strict penal codes. It can be seen that strict laws work because Japan now ranks 24th in the global corruption index, its lowest level in five years. In general, the same amount of corruption occurs in the US as it does in Japan, just between different people. This bribery and corruption trend will most likely tend to decrease since it has been decreasing for the past 5 years. Cultural BarriersRating:2005:12345672010:1234567Analysis:Language and cultural differences are a major problem for relations with the Japanese and United States. A joint venture operation is needed to relate to firms in Japan. Individuals take pride in their culture and have done so for generations leaving very little room for change, but in order to do business internationally, many firms are starting to take measures to deal with foreigners. Overall SummaryOverall Summary for JapanPolitical IndicatorsCurrent Rating (2005)5 Year Forecast (2010)1. Political Stability672. Public Policies Impacting F.D.I.673. Views of Political Leaders664. Major Political Events665. Democracy776. Tensions with U.S.777. Support for Current Government778. Influence of Anti-Business Groups779. Public Opinion of Foreign Ownership7710. External Threats of War64Total:6565Average:6.56.5Rating: Low RiskEconomic IndicatorsCurrent Rating (2005)5 Year Forecast (2010)1. Economic Growth Rates562. Inflation653. Unem ployment Rates664. Investment Policies775. Fiscal Policies566. Foreign Debt777. Infrastructure668. Remittance of Earnings779. Per Capita Income7710. Competitive Forces77Total:6364Average:6.36.4Rating: Low RiskSocial IndicatorsCurrent Rating (2005)5 Year Forecast (2010)1. Education772. Crime773. Labor Force664. Ethnic Conflict565. Social Cohesion776. Quality of Life657. Family Stability668. Bribery569. Cultural Barriers45Total:5355Average:5.96.1Rating: Low RiskSummary AnalysisOverall Total: 181Country Average: (181 / 29) 6.24Rating: Low RiskComaprison: Ranked 24th in global corruptionRanked 6th in lowest inflation (-0.3%)Ranked 3rd in lowest infant mortality rate (3.3 per 1000)Ranked 4th in life expectancy (81.0)Ranked 4th in most developed country of the worldOne of the densest countriesPer capita murder rate in Japan is 6 times lower than that of the U.S. 1.1% of GDP for education in Japan versus 4.8% for the U.S. Ranked 4th in direct investmentRanked 5th in GNP per capitaRanked Triple-A from Moodys on foreign debtMember of G7Summary:Japan continues to be a very eye-catching country for direct investment as it is ranked 4th compared to the rest of the world in investment. The country is politically stable with government policies encouraging investment from abroad. It is also very democratic much like the United States, and both countries are aligned with one another. There are not many anti-business groups because society encourages business as well as the majority Liberal Democratic Party. Japan is currently devising a military expansion plan due to a perceived nuclear threat from North Korea. The economy is currently undergoing a decent growth rate of 2.3%. There have been many attempts to revive the economy due to the recession of the 90s, but lately businesses have been successful due to an increase in exports. Deflation is currently occurring due to lack of consumer spending and unemployment rates are still low at 4.7%. Once again the government is very comforting to investment in Japan in order to help the economy, and they have recently lowered corporate tax rates and amended laws to accommodate businesses. The country has absolutely no foreign debt and a great infrastructure. Education in Japan is ranked among the highest in the world, with also a very low crime rate. This creates an excellent workforce that is dedicated in working for a company its entire life. Society in Japan is generally cohesive, with a high quality of life, low divorce rates, and high longevity. The only barrier in Japan is the language and culture since many are keen on tradition. Overall, all ratings on political, economic, and social indicators will increase in the next 5 years. The government is doing a lot to encourage investment and spending. Society is very stable and focused on tradition and loyalty. The economy is currently lackluster but shows hope for the future. Japan will only continue to become more attractive. End NotesEnd NotesFollowing are pictures that represent Japanese culture and infrastructure:A typical Japanese city courtesy of horohata.netA bridge in Kobe, Japan courtesy of kathar.comA Japanese eatery courtesy of thelins.orgA cramped bedroom courtesy of thelins.orgNarrow roads and pathways courtesy of thelins.orgA train station in Harajuku, Japan courtesy of pantsofevilgamers.comA skyline of Igor, Japan courtesy of chanime.narod.ruA canal in Asakusa, Japan courtesy of pantsofevilgamers.comBibliographyBibliography1996 Country Commercial Guide. 5 Jul. 1995. U.S. Embassy Japan. 17 Mar. 2005. . Alexander, Arthur J. U.S. Direst Investment in Japan: Another Dimension of the Economic Relationship. 2 May 1997. Japan Economic Institute. 17 Mar. 2005. . Brinsden, Colin. Moodys Rating Rethink Lifts Four Nations to Triple-A. 21 Oct. 2002. Market New Zealand. 11 Apr. 2005 . Brooke, James. Japan Shifts Threat Focus to N. Korea and China. 11 Dec. 2004. International Herald Tribune. 6 Apr. 2005. . 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Statistical Handbook of Japan. 2004. Japan Statistics Bureau. 24 Mar. 2005. . Tiron, Roxana. Japan Shapes Military Forces To Tackle Emerging Threats. Aug. 2003. National Defense. 6 Apr. 2005. . The Wizard of Oz Visits Japan. 2004. EconEdLink. 9 Apr. 2005. . Worldwide Education and Library Spending. 2001. OCLC. 24 Mar. 2005. . Yi, Beckie. Koreans Living In Japan: How They Got There, Current Status. 2 Apr. 1995. soc.culture.korean Newsgroup. 29 Mar. 2005. . MapsMapsPolitical map of Japan courtesy of lib.utexas.eduTopographic map of Japan courtesy of sunsite.tus.ac.jpPopulation density of Japan courtesy of UCLA Asia InstituteRelative location and size of Japan courtesy of UCLA Asia Institute Cultural Map of Japan courtesy of UCLA Asia InstituteEconomic map of Japan courtesy of geocities.com/tmljpn01/pl.htm