In 1998, foreign direct investment flows into the United States equaled 8.6 percent of our gross domestic product. In 1997, foreign affiliated firms produced about 6 percent of our GDP and 12 percent of the output of our manufacturing sector. There are substantial beneficial impacts at the local level in the states which have attracted the investment. More than 11 percent of Hawaii's total workforce is employed by foreign-affiliated companies. By comparison, in Japan fiscal year 1998, inward direct investment was about one quarter of one percent of Japan's gross domestic product and was the lowest among OECD countries.
Japan has to compete with investors' other options in a global business environment.
For investment to grow in Japan, it needs to take place in a competitive, deregulated market. Regulatory reform will increase productivity, open markets, and create the basis for a sustainable economic recovery in Japan. Under the US-Japan deregulation initiative, our two governments are examining measures to open up such sectors as financial services, energy, and telecommunications. We are now in the process of completing our Joint Report on Deregulation. Telecommunications is one of the best examples of how regulatory reform can reduce prices, provide more innovative services, and stimulate broader economic growth.