Given the insularity of Japan and its unique institutional, economic and cultural framework, we posit that the economic distance, the economic freedom distance and the cultural distance between Japan and the host country of investment will have an important influence on its Foreign Direct Investments (FDI) levels. Using a 31 country sample in the context of the Middle East and Africa, we empirically test in a longitudinal study between 2003 and 2012, a set of institutional, economic, demographic and cultural variables to test for the ‘Country Acquaintance’ hypothesis as a liability of foreignness mitigating, or aggravating factor. Data pertaining to the Japanese outbound foreign direct investment were retrieved from the Japanese Ministry of Finance and from The Japan External Trade Organization (JETRO). The study finds that the aforementioned variable all play an important and negative role in Japanese FDI in the Middle East and Africa.
Amine Bouyoucef, The Tokyo Institute of Technology, Japan
SulinChung, The Tokyo Institute of Technology, Japan
Stream: Business Administration and Business Economics
This paper is part of the ACBPP2014 Conference Proceedings (View)
View / Download the full paper in a new tab/window