Production Offshoring and Investment by Japanese Firms

Author/Editor:

Joong S Kang ; Shi Piao

Publication Date:

July 30, 2015

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We trace Japanese corporate investment across different types of firms over the past decades and estimate the main determinants of investment. We find that there are differences in investment behavior between firms expanding abroad and those operating mainly in domestic markets. On the back of a trend increase in production offshoring, investment by large companies, especially those in the transportation sector, is more positively associated with cash flow while responding less to Q ratio. These findings are consistent with the subdued recovery of private investment in recent years despite booming stock markets and the large build up of cash holdings by Japanese corporates.

Series:

Working Paper No. 2015/183

Subject:

Corporate investment Currencies Economic sectors Financial crises Global financial crisis of 2008-2009 Manufacturing Money National accounts Private investment

English

Publication Date:

July 30, 2015

ISBN/ISSN:

9781513557298/1018-5941

Stock No:

WPIEA2015183

Pages:

20

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