Chapter

How Japanese Subsidiaries in Asia Responded to the Regional Crisis

Kyoji Fukao

in Regional and Global Capital Flows

Published by University of Chicago Press

Published in print July 2001 | ISBN: 9780226386768
Published online February 2013 | e-ISBN: 9780226387017 | DOI: http://dx.doi.org/10.7208/chicago/9780226387017.003.0009
How Japanese Subsidiaries in Asia Responded to the Regional Crisis

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Using subsidiary level data from the Japanese Ministry of International Trade and Industry (MITI) 1996 and 1997, this chapter analyzes the response of Japan's manufacturing subsidiaries in the ASEAN-4 countries and Korea to the recent Asian financial crises, which started in the second half of 1997. The chapter is organized as follows. Section 8.2 provides an overview of the performance of Japan's manufacturing subsidiaries after the crisis. Section 8.3 studies recent trends of Japan's foreign direct investment flows to ASEAN-4 countries and Korea. Section 8.4 compares subsidiaries' performances and responses across industries and host countries. By subdividing subsidiaries into two groups, it also examines how different characteristics of subsidiaries affected their performance and response. Section 8.5 undertakes an econometric investigation of Japanese subsidiaries' response using microdata from MITI surveys. The results show that in the months following the Asian crisis, Japanese subsidiaries did not reduce employment, although they did not undertake any further new investments. The greater the profitability of the parent company, the greater the likelihood that a subsidiary would maintain employment, suggesting that subsidiaries receive support from their overseas owners during periods of crisis, which may offset part of the impact of the crisis on the economy in which the subsidiary operates. Two commentaries are included at the end of the chapter.

Keywords: Asian financial crises; Japanese manufacturing subsidiaries; Ministry of International Trade and Industry; ASEAN-4 countries; Korea; employment

Chapter.  13242 words.  Illustrated.

Subjects: International Economics

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