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Globalized Business of Japanese Multinationals in Latin America: What Trade and Investment Statistics Do Not Show

Mikio Kuwayama
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Mikio Kuwayama: Research Fellow of Kobe University Research Institute for Economics and Business (RIEB) and Managing Director of the Japan Association of Latin America and the Caribbean (JALAC), JAPAN

No DP2021-18, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: China has displaced Japan as the most important Asian trading partner for the Latin American and the Caribbean (LAC) region since the turn of the century. However, this rather pessimistic view of the Japan-LAC commercial relationship based on bilateral trade statistics drastically changes when business activities of Japanese subsidiaries and affiliates (S&As) operating in the LAC region are considered. Extrapolating from the annual surveys of “Basic Survey on Overseas Business Activities” conducted by Japan’s Ministry of Economy, Trade, and Industry (METI), this paper brings to light highly globalized and multi-faceted business operations by Japanese multinational companies operating in LAC, the scale of which goes far beyond the magnitude indicated by Japan’s official trade and investment statistics. Notably, a significant part of their global business is exported to, or sourced from, third countries, which significantly underestimates the scale of trade and investment by these S&As in the LAC region. At the same time, almost half of their sales are directed to domestic/local markets of LAC countries, whereas sales back to Japan are minimal. This paper also evaluates the Japanese S&As performance in LAC with that in other regions (the ASEAN countries in particular), with respect to: 1) industrial/sectoral distribution of their sales and procurements, 2) export orientation, and 3) capital investment, R&D expenditure, and ordinary profit. The paper also points out several distinctive features of S&As business in Brazil and Mexico, their two major host countries in the region.

Pages: 41 pages
Date: 2021-09, Revised 2021-10
New Economics Papers: this item is included in nep-int, nep-isf and nep-sea
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