Further evidence on Japanese direct investment in US manufacturing

This paper examines the cross-industry determinants of the importance of Japanese direct investment activities in U.S. manufacturing, through an extension of the analysis in a recent article by Kogut and Chang. The results indicate significant positive roles for Japanese technology and marketing assets. While U.S. technology assets are insignificant, a significant negative effect for U.S. marketing assets suggests that entry barriers related to marketing are more important than any use of FDI by Japanese firms to access these assets. In addition, U.S. government policies toward defense-oriented industries appear to act as a deterrent to Japanese direct investment.