demand generated by attracting overseas visitors, which includes such measures as hosting the 2020 Tokyo Olympic and Paralympic Games. In the following paragraphs, we detail 2 paths along which ICT makes economic contributions: ICT product and service exports and overseas investments and ICT-driven growth in inbound demand.

## (1) ICT-related exports and overseas investments

### a. Overview of economic contributions

Overseas expansion by enterprises generally refers to exports (trade), investments, business partnerships, and other forms of transactions (Figure 1-2-5-1).

Enterprises usually select the best form of overseas expansions for them, in view of the nature of their business and types of transactions as well as their productivity and other factors. Certain types of overseas expansion tend to be used for certain product and service areas. For example, exports (trade) are the mainstay of manufacturing industries, whereas commerce and service industries more often utilize investments.

Given the inevitable waning of domestic demand, Japanese enterprises, regardless of their industry or size, are viewing overseas markets as survival routes. This is true of enterprises outside of industries, such as manufacturing industries, with a history of overseas expansion, and even extends to such domestic-demand-centric fields as distribution, services, and construction.

Among ICT enterprises, direct investment is the most common form of overseas expansion in all layers, but exports are also used relatively frequently, at 57.1 percent, in the device layer (Figure 1-2-5-2). The ICT industry, in particular, because of its inherent economies of scale, leans toward the formation of oligopolies. Therefore, given rapid globalization, whether or not a company expands globally has a profound influence not only on business enlargement but also on competitiveness. For this reason, many global ICT enterprises aggressively expand overseas using a variety of means, particularly direct investment.

But does this kind of overseas expansion really have positive benefits for the domestic economy? Kimura and Kiyota (2003) and Fukao and Amano (2004), for example, have made clear, from analyses of individual Japanese enterprises' financial data, that foreign-owned enterprises have higher TFPs than domestic enterprises. According to a RIETI study (2009) that analyzed the impact of globalization at Japan's largest enterprises on the domestic economy, overseas expansion strengthened the enterprises' businesses as well as lifted domestic production. These effects occurred regardless of whether the expansion was directed into developed countries or developing countries. The study also demonstrated that overseas expansion stimulated production activities, especially in terms of expanding employment and production value. And according to the results of another analysis by RIETI (2012), overseas expansion by manufacturing industries, the wholesale sector, and the service industry boosted employment in every case. The analysis calculated that manufacturing industries' overseas expansion pushed up the employment growth rate by about 12 percent, whereas a 9 percent hike was seen in the wholesale sector and the service industry.

### b. Overseas expansion trends and examples

The following paragraphs give examples for each of the main forms of overseas expansion related to ICT: namely, exports, direct investments, and business part-

Figure 1-2-5-1 Categories of overseas expansion

Category	Description	Remarks
Exports (trade)	Direct exports	Trading arrangement where goods are exported directly to overseas customers	Though this refers to transactions of tangible goods, there are also transactions of intangibles such as trade in services and technology trades
Indirect exports	Trading arrangement where exports are made via a trading company or other third party (including countries difficult to export to)
Investments	Direct investments	The purpose is to control, or participate in, the management of the company receiving the investment. Methods include investing 100 percent of funds to set up a new company in the country receiving the investment (greenfield investments) or acquiring an existing company (M&A)	Investments can be broken down into full ownership (100% financing) or joint financing with an overseas company, from the view of the financing ratio, and into investment in the same industry or investment in a different industry, from the view of the investment target
Indirect investments	The purpose is to secure income through interest, dividends, or sales proceeds without intervening in management
Business partnerships	The completion of a business operations cooperation agreement with an overseas company for a specific field or business domain	Examples include technology development / involvement, production, resource procurement, logistics, personnel exchanges, and sales promotion