Yasuyoshi Masuda, chief researcher, Fuji Research Institute. Diamond, November 11, 2000. Expectations have risen that foreign firms will have a rejuvenating effect on the Japanese economy. However, we should refrain from harboring excessively high hopes. Japan differs from developing countries with immature industries, low production capacities, and low wages, and from the U.S., which has a low savings rate.
Foreign corporations import parts from their home country, thereby increasing Japan's imports.
And most foreign corporations in Japan run a trade deficit. Japan is a country awash with money emanating from a massive surplus of savings and an ultra-loose monetary policy, so there is no need to seek capital from abroad. And the ruthless restructuring drives implemented by foreign firms push up the unemployment rate over the short term. Furthermore, high technology transfers rarely occur because most high technology is protected by patents. Technical tie-ups are less expensive for the national economy than foreign capital participation.