The latter shrinkage might be more apparent than real, however, given the methodological problems of MOF's data-collection process. Just-released Department of Commerce data on foreign direct investment in the United States indicate an increase in corporate Japan's investment outlays in 1998. The resulting numbers then were added to the dollar-based stock figures for FY 1994. Despite the sharp drop in the flow of direct investment across the Pacific in FY 1998, the United States easily retained its number-one position when Japan's cumulative investment position was tallied. By industry, Japan's foreign direct investment also showed a pullback with a few exceptions.
Companies put more money into making food products and wood and paper goods overseas.
Overall, however, Japanese investment in offshore manufacturing was down 37.6 percent in FY 1998, a not unsurprising development since corporate Japan historically has viewed the United States and Asia as the best locations for production abroad. Investment in other types of ventures was off 18.7 percent. Nevertheless, from FY 1950 through FY 1998, cumulative Japanese FDI in nonmanufacturing firms was more than double the figure for manufacturing. The financial sector, especially banking and finance, easily was the top target. The resulting numbers then were added to the dollar-based stock figures for FY 1994.