Determinants of foreign direct investment in Japan / Nurul Afifah Husna Kamarozaman

The growth performance of Japan is strongly depending on the FDI of the country. By having a strong FDI, Japan can generate economic growth as FDI help Japan to increase the capital formation through the expansion of production capacity and the promotion of export growth. However, FDI in Japan is fluctuating every year and for last three years starting from 2016 until 2018, Japan FDI shows a decrease. Therefore, this study is done to examine the determinants of foreign direct investment in Japan from year 1983 until 2018 to help Japan government to focus on the important determinants that can help to boost back the FDI of the country. For this study, Multiple Linear Regression method with Time Series Data is being used. The data incurred from World Bank Database while software package which is E-View is used to test and analyse the data collected. The results for this study show that there is negative significant relationship between corporate tax, exchange rate and employment with FDI in Japan. However, the result is inversely for trade openness as it shows positive significant with FDI in Japan as if a country is easier to do a trade, the more the investment will be made by foreign investor to those countries. As for research and development, the result shows insignificant relationship with FDI in Japan. This study will provide an indicative view to help in forming an important basis for foreign investor to make investment strategies and help in making decision.