FDI Attractiveness: Japan vs USA

This assignment examines the factors influencing Foreign Direct Investment (FDI) attractiveness in Japan and the USA. It analyzes the political and economic scenarios of both countries, highlighting key aspects such as political stability, economic growth, population size, and government policies promoting inward FDI. The comparison aims to reveal the relative advantages and disadvantages each country presents for foreign investors.

Running head: GLOBALISATION
Globalisation
Name of the Student
Name of the University
Author note

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GLOBALISATION
FDI attractiveness of Japan
Japan faces differences in its FDI attractiveness in past certain years due to their
political and economic scenario. This is because foreign companies invest in Japan by
analyzing the chances of sale and profit they will earn from the investment.
Political
It is seen that Japan has become a volatile country because of continuous disputes and
rivalries in the past years. Such political tensions have affected the country for a long time
and the country depended on China for its goods. Famous trading agencies of Japan are
initiating foreign companies to invest in Japan. Thus, even though the attractiveness for FDI
in Japan has been low, yet it seems to increase in recent years.
Economic
The country also has a low population of 127 million and a GDP of USD 39,089 in
2016 (Export.gov, 2017). This is comparatively low then other countries and does not allow
foreign companies a chance to enter in Japan and increase direct sale. The GDP per capita has
been decreasing compared to previous years. However, the country is growing
technologically which offers a chance to foreign companies to manufacture technologically
advance goods. However, the government of Japan has been promoting inward FDI in the
country that doubles by 2020 (Japan Economy, 2017).
FDI attractiveness of USA
FDI attractiveness for a country is based on the several macro environmental factors
such as political and economic scenario of the country.
Economic

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GLOBALISATION
USA economy is a well-developed economy with a GDP per capital of USD 57,436
and a population of 323 million. The economy has also shown an incredible growth of 3.1
percent in the second quarter of this year, which is far from, expected (United States
Economy, 2017). The country offers a potential for economic growth in future with the rising
technological growth. This offers a chance to FDI investors to invest in the country and
expect direct sales in the country.
Political
USA has always been a politically stable economy and highly supportive for carrying
out new business. USA has the least risk of political violence, government actions and capital
control. USA stands strong in political stability with a score of 0.70. The country also offers
the most suitable place for trade regulation, as they do not have a strict import tariff or quota
(Selectusa, 2017). This has made USA the largest recipient of Foreign Direct Investment and
FDI is increasing continuously in this country.

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GLOBALISATION
References
Export.gov. (2017). Japan - 1-Openness to, & Restriction Upon, Foreign Investment |
export.gov. Retrieved 16 November 2017, from https://www.export.gov/article?
id=Japan-openness-to-foreign-investment
Japan Economy (2017). FocusEconomics | Economic Forecasts from the World's Leading
Economists. Retrieved 16 November 2017, from
https://www.focus-economics.com/countries/japan
Selectusa.gov. (2017). Foreign Direct Investment in the United States | SelectUSA.gov |
SelectUSA.gov. Retrieved 16 November 2017, from https://www.selectusa.gov/FDI-
in-the-US
United States Economy (2017). FocusEconomics | Economic Forecasts from the World's
Leading Economists. Retrieved 16 November 2017, from https://www.focus-
economics.com/countries/united-states