1 See Dunning, John H. 1993. Multinational Enterprises and the Global Economy.Wokingham, England: Addison-Wesley, particularly pp. 99-119.
2 See Mason, Mark. 1992. American Multinationals and Japan: The Political Economy of Japanese Capital Controls, 1899-1980.Cambridge, Mass.: Harvard University Press, p. 14.
3 Weistein, David E. 1994. “Structural impediments to investment in Japan: What have we learned over the last 450 years?” Paper prepared for Wharton Conference on Foreign Direct Investment in Japan: Why So Small and How to Encourage, October 1994, pp. 1-2.
4 Weistein, p. 3.
5 Mason, 1992, p. 17.
6 Mason, 1992, p. 46.
7 Encarnation, 1992, p. 106.
8 “These methods included controls imposed directly on the foreign investor, together with actions to assist domestic firms, which placed foreign-controlled subsidiaries at a competitive disadvantage.” Encarnation, p. 50.
9 The FIL made no distinction between direct and portfolio investment. Mason, 1992, pp. 155-156.
10 From 1956 to 1963 Japan also operated a system under which MNCs could receive national treatment if they reinvested yen earnings in Japan rather than remit them abroad. In contrast to FILapproved investments, which were mostly minority foreign owned, these yen-based subsidiaries were mostly majority owned. The yen-based system was suspended, following a sudden influx of foreign MNCs utilizing it in the early 1960s. See Encarnation, 1992, pp. 50-59.
11 This is Mason's central theme.
12 In addition to technological and political advantages, access to needed raw materials also facilitated foreign MNC entry into Japan. The most important example is the petroleum industry—the industry sector that attracted the most U.S. FDI in Japan through most of the postwar period up to 1988, when it was surpassed by wholesale trade. See Encarnation, 1992, p. 93.
13 Mason, 1992, pp. 161-173. For example, limits on foreign exchange restricted the amount of syrup that could be imported, the number of designated outlets was limited to 186 in the Tokyo area, retail dealers had to pledge to charge no less than 35 yen per bottle (competing domestic drinks sold for 20 yen), a luxury tax of 156 yen per 24-bottle case was imposed, and all Coca-Cola advertising via the media or in outdoor locations was banned throughout Japan.
14 Mason, 1992, pp. 174-187.
15 In particular Abegglen, James C. and George Stalk, Jr. 1985. Kaisha: The Japanese Corporation.New York, N.Y.: Basic Books, pp. 126-129. See also the Japanese working group's report in this publication.
16 In addition to work cited elsewhere, Christelow, Dorothy B. 1995. When Giants Converge: The Role of U.S.-Japan Direct Investment.Armonk, N.Y.: M.E. Sharpe, pp. 61-81. Acquisition of U.S. technology also was facilitated by U.S. approaches to antitrust enforcement and competition policy over this period, which often required dominant companies such as AT&T and IBM to license their innovations for reasonable royalties and licensing fees.
17 Fruin, W. Mark. 1992. The Japanese Enterprise System: Competitive Strategies and Cooperative Structures.Oxford: Oxford University Press, p. 5, discusses the capabilities needed for effective inward technology transfer.
18 Anchordoguy, Marie. 1989. Computers Inc.: Japan's Challenge to IBM.Cambridge, Mass.: Harvard University Press, pp. 22-26.
19 Several of these successful cases are described in the Japanese working group's report.
20 Mason, 1992, pp. 195-197.
21 Lynn, Leonard. 1994. “MITI's Successes and Failures in Controlling Japan's Technology Imports.” Hitotsubashi Journal of Commerce and Management.December: 15-33.