Japanese investment in liberalizing Latin American economies: current pattern and possible impacts of FTA initiatives

TSUNEKAWA, KEIICHI

doi:10.1590/0101-31571995-0814

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Articles • Brazil. J. Polit. Econ. 15 (3) • Jul-Sep 1995 • https://doi.org/10.1590/0101-31571995-0814 linkcopy

Japanese investment in liberalizing Latin American economies: current pattern and possible impacts of FTA initiatives

Investimento japonês na liberalização das economias latino-americanas: padrão atual e possíveis impactos das iniciativas da TLC

Authorship SCIMAGO INSTITUTIONS RANKINGS

This paper analyzes Japanese investments in Latin America, especially in Chile, Mexico, Argentina, Venezuela and Brazil. In addition, it discusses the possible impacts that the free trade agreements being implemented in the region would have on these investments.

KEYWORDS:
Globalization; investment; capital flows; economic integration

	Accumulated value (bn. $)	Distribution by industry(%)
	Accumulated value (bn. $)	Total	Manufacturing	Commerce	Mining	Agriculture/Fishery	Finance/lnsurance	Servicesª
1971
Total	4.5	100.0	28.0	12.2	30.2	2.4	8.8	17.5
North America^b		25.1	6.0	9.2	4.3	0.2	3.2	2.1
Europe		16.0	1.3	1.0	0.1	0.0	1.5	12.0
Latin America		15.7	7.4	0.5	3.5	0.4	1.8	1.6
Asia		22.6	10.3	0.7	7.1	1.4	1.6	1.3
MiddleEast		8.3	0.1	0.0	8.1	0.0	0.0	0.0
1980
Total	35.0	100.0	34.8	14.5	19.7	2.5	6.4	15.8
North America^b		26.4	6.7	9.4	1.4	0.7	2.4	3.8
Europe		12.1	2.2	2.1	2.5	0.0	2.2	2.7
Latin America		17.0	7.8	1.2	3.4	0.6	0.8	2.7
Asia Middle East		27.3	12.7	1.1	8.5	0.8	0.7	3.0
		6.2	3.0	0.0	0.1	0.0	0.1	0.2
1990
Total	310.8	100.0	26.3	10.1	5.3	0.7	21.0	33.9
North America^b	136.2	43.8	13.0	5.5	0.7	0.2	6.2	17.4
Europe	59.3	19.1	4.0	2.2	0.5	0.0	8.1	3.6
Latin America	40.5	13.0	2.0	0.7	0.5	0.1	4.7	4.9
Asia	47.5	15.3	6.0	1.2	2.4	0.2	1.4	3.7
MiddleEast	3.4	1.1	0.4	0.0	0.1	0.0	0.0	0.0

	Total	Food	Textiles	Wood/Pulp	Chemicals	Metais	General machinery	Electrical machinery	Transpor! machinery	Others
1971
Total	100.0	6.4	20.3	20.9	6.1	15.0	7.3	7.8	9.2	7.0
North America	21.5	0.7	0.6	16.6	0.9	0.1	0.8	0.3	1.2	0.3
Europe	4.6	0.5	0.1	0.0	1.4	0.7	1.1	0.1	0.3	0.2
Latin America	26.6	0.9	5.4	0.0	0.7	7.8	3.6	1.9	5.9	0.5
Asia	36.8	2.9	12.8	1.4	2.9	3.2	1.6	5.2	1.1	5.7
1980
Total	100.0	4.7	13.0	6.1	21.1	20.9	7.2	12.2	7.6	7.2
North America	19.1	1.7	1.4	2.7	1.9	2.9	1.8	5.0	0.7	0.9
Europe	6.4	0.3	1.1	0.0	0.8	1.2	1.0	0.7	0.5	0.8
Latin America	22.3	1.1	2.9	1.5	4.1	5.9	2.0	1.7	2.5	0.6
Asia	36.5	1.2	7.3	1.1	5.7	8.2	2.2	4.4	2.2	4.2
1990
Total	100.0	5.1	4.9	3.6	13.4	12.6	9.7	24.9	13.3	12.4
North America	49.4	2.2	0.9	2.5	5.9	5.1	4.9	13.6	6.2	8.0
Europe	15.4	0.6	1.1	0.0	1.7	0.7	2.2	5.3	2.3	1.4
Latin America	7.7	0.3	0.6	0.3	0.9	2.5	0.5	0.8	1.6	0.2
Asia	22.9	1.4	2.3	0.6	3.2	3.4	2.0	5.1	2.1	2.6

All industries
	Share in total sales(%)				Share in total purchase (%)				Ratio of export-to-Japan to import-from-Japan (import=100.0)
	Local sales	Export to Japan	Export to North America	Export to all others	Local purchase	lmportfrom Japan	lmportfrom North America	lmport from all others
1975	78.6	8.5	12.8		55.5	32.4	12.1		n.a.
1977	60.5	12.2	27.3		34.9	31.2	33.9		n.a.
1980	53.8	26.0	3.5	9.3	37.5	31.1	8.7	22.6	117.3
1983	64.4	22.3	1.2	12.1	36.8	46.4	1.6	15.1	80.1
1986	61.5	20.0	4.4	12.1	36.7	24.9	5.2	33.1	203.2
1987	50.6	32.9	6.3	10.2	23.3	26.8	4.2	45.7	231.3
1988	53.1	29.3	4.8	12.9	30.1	30.3	16.5	23.0	146.5
1989	36.1	47.3	4.8	11.8	25.4	26.9	4.3	43.3	338.1
1990	56.2	24.8	6.6	12.4	37.4	29.7	11.2	21.7	121.2

Manufacturing Industries
	Share in total sales(%)				Share in total purchase (%)				Ratio of export-to-Japan to import-from-Japan (import=100.0)
	Local sales	Export to Japan	Export to North America	Export to all others	Local purchase	lmport from Japan	lmport from North America	lmport from all others
1975	85.8	4.5	9.8		63.4	25.7	10.9		n.a.
1977	91.9	1.1	7.0		75.7	18.5	5.8		n.a.
1980	82.6	9.4	2.7	5.3	66.7	24.5	7.7	1.1	109.5
1983	87.3	7.7	2.2	2.8	28.5	68.7	0.6	2.2	20.6
1986	80.5	4.1	5.0	10.4	60.5	26.5	10.9	2.1	53.9
1987	75.4	7.7	8.0	8.9	59.1	31.8	5.4	3.8	59.3
1988	76.1	6.1	6.1	11.8	51.1	42.0	5.4	1.5	35.7
1989	69.9	10.9	9.0	10.2	66.7	13.4	5.5	14.4	282.7
1990	82.6	4.9	8.5	4.0	68.2	23.5	2.5	5.9	41.5

Japanese subsidiaries^a			US subsidiaries^b
Region	Expor!	Impor!	Region	Expor!	Impor!
1983			1982
Ali regions	88.2	100.0	Ali regions	90.6	100.0
USA	78.9	100.0	Canada	109.7	100.0
Europe	27.2	100.0	Europe	33.8	100.0
Latin Ame rica	80.1	100.0	Latin America	102.2	100.0
ASEAN	69.5	100.0	Japan	156.4	100.0
OtherAsia	157.4	100.0	Asia	145.7	100.0
1989			1989
Ali regions	78.9	100.0	Ali regions	91.8	100.0
USA	52.7	100.0	Canada	105.1	100.0
Europe	48.0	100.0	Europe	52.4	100.0
Latin America	338.1	100.0	Latin America	95.5	100.0
ASEAN	45.9	100.0	Japan	83.8	100.0
NIES	255.7	100.0	Asia^c	153.2^d	100.0

	Chile			Mexico			Brazil			Venezuela			Argentina
	1980	1985	1990	1980	1985	1990	1980	1985	1990	1980	1985	1990	1980	1985	1990
Mining & petroleum	63.0	43.4	27.1	60.5	37.8	26.8	5.2	3.9	3.8	0.0	0.0	0.6	0.0	0.0	0.0

Agriculture/forestry	0.0	0.0	6.1	0.2	0.2	0.2	3.4	2.7	2.2	0.5	0.5	0.5	0.0	0.1	0.1
Fishery	17.3	13.9	18.2	0.9	0.6	0.4	0.2	0.2	0.1	1.3	1.1	0.4	4.5	7.3	7.8

Manufacturing	3.9	3.1	18.4	34.4	52.6	61.4	65.0	68.3	62.0	84.6	84.6	66.3	40.4	37.5	24.9
Foodstuff	0.0	0.1	0.4	1.8	1.9	3.2	3.5	2.9	2.7	0.1	0.1	0.0	0.1 0.0		0.1
Textiles	0.0	0.0	2.9	0.4	0.4	0.4	10.0	7.6	5.7	2.3	2.0	0.8	17.1	5.9	2.2
Wood/pulp	0.4	0.3	2.8	0.0 0.0		0.0	6.2	4.1	2.9	0.0	0.0	0.0	1.4	0.4	0.1
Chemicals	0.0	0.0	0.7	4.6	3.3	3.2	2.8	3.4	4.9	0.2	0.5	0.2	2.7	0.7	0.3
Metais	0.0	0.0	8.5	5.7	8.1	6.8	20.4	31.5	26.6	76.3	67.9	50.0	0.0	0.0	0.0
General machinery	0.0	0.3	0.2	3.3	2.4	2.3	7.6	6.8	5.6	0.0	1.9	1.4	1.1	0.3	0.1
Electrics/electronics	0.3	0.2	0.5	2.0	2.0	2.1	5.8	5.2	6.8	1.6	1.4	4.9	14.3	10.9	14.4
Transportation equip.	3.2	2.2	1.3	15.9	34.0	42.9	6.3	5.6	5.1	3.8	10.5	8.6	1.6	9.3	3.9
Others	0.0	0.0	1.2	0.6	0.4	0.6	2.3	1.7	1.9	0.4	0.5	0.2	2.2	10.1	3.8

Trade & services	5.5	29.9	19.4	2.4	8.0	10.5	16.7	15.3	13.5	8.7	9.5	30.4	27.9	44.8	63.4
Banking/insurance	5.0	3.5	6.6	1.5	0.9	0.6	7.1	8.0	16.8	0.0	0.0	0.0	24.3	6.4	2.4

Total (millions of dls.)	124	180	311	827	1,330	1,874	2,908	4,587	6,560	115	132	341	42	160	431

	Changefrom manufacturing to importing	Presence in resource processing sector
Chile	High	High
Venezuela	Medium	High
Argentina	Medium	Medium
Brazil	Low	High
Mexico	Low	Low

Motives	Industry	All manufacturing			Electric/electronics			Transport equipment			General machinery
Motives	Host Country	USA	LA	Asia	USA	LA	Asia	USA	LA	Asia	USA	LA	Asia
Access to raw materiais		5.1	14.7	5.6	4.0	4.5	2.9	2.3	0.0	1.3	1.5	0.0	1.9
Abundance of local resources		8.5	14.1	6.5	3.2	4.5	1.5	4.6	0.0	0.7	4.5	0.0	1.0
Utilization of local labor		14.6	48.0	64.3	19.2	68.2	74.2	13.8	4.5	51.1	13.6	35.3	63.1
Policy of host government		8.7	37.9	32.8	3.2	59.1	30.2	18.4	27.3	57.6	10.6	76.5	31.1
Expansion of
local market		81.6	62.1	61.2	81.6	72.7	62.2	88.5	77.3	76.3	80.3	82.4	69.9
Third-country market		12.3	13.0	25.3	13.6	9.1	27.0	9.2	9.1	12.9	18.2	23.5	36.9
Japanese market		9.8	6.2	18.2	9.6	2.3	19.9	11.5	0.0	8.6	4.5	0.0	21.4
Gathering of information		27.3	5.6	6.7	27.2	0.0	5.6	23.0	4.5	2.9	30.3	17.6	14.6
Receipt of dividends and others		9.9	11.9	9.8	4.0	0.0	4.7	3.4	0.0	4.3	6.1	11.8	12.6
Avoidance of exchange risk		13.9	3.4	4.4	5.6	4.5	7.6	24.1	0.0	2.2	19.7	11.8	3.9
Trade friction		17.4	0.6	1.8	21.6	2.3	4.1	29.9	0.0	0.7	18.2	0.0	0.0
Other reasons		19.0	15.8	9.4	20.8	6.8	9.4	13.8	27.3	8.6	18.2	0.0	4.9

	Ratio of export-to-North America to import-from-North Americaª by Japanese subsidiaries(lmport=100.0)			Ratio of export-to-US to import-from-US by US subsidiaries’’ (lmport=100.0)
	AII sectors	Manufacturing		AH sectors	Manufacturing	Automotive
1980	75.1	100.8	1977	131.7	41.5	n.a.
83	138.5	1069.9	82	102.2	58.7	36.2
86	217.2	160.3	89	95.5	98.4	n.a.
87	195.2	365.9
88	37.6	309.2
89	121.4	296.8
90	68.2	658.4

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[TFN1] Sources: Okurasho zaiser kinyu toukel geppo , nº 244 (June 1972), Ministry of Finance 1981 & 1991.

[TFN2] ^a Include transportation and real-estate business.

[TFN3] ^b Approximately 90% are for the United States of America.