JETRO Invest Japan Report 2023
Chapter1. Inward FDI Trends in the World Section 4. Changes in Global Investment Destinations due to Geopolitical Risks

According to the survey by the International Monetary Fund (IMF), the number of investment destinations in strategic sectors (announced basis) has been on a downward trend since 2019, which is particularly significant in Asia. A slight recovery trend, however, is seen in Asia, with the exception of China (Chart 1-5).

An analysis by IMF of the investment sources and destinations by region based on the number of cases suggests that China is falling significantly both as an investor and as an investee. With the exception of Emerging Europe, the analysis suggests that the importance as an investment destination from all regions has decreased (Chart 1-6).

This situation may have a major impact on companies' investment strategies in Japan.

Chart 1-5: Investment in Strategic Sectors*1 in selected country*2
IMF, the International Monetary Fund surveyed the number of investment destinations, in strategic sectors in the United States, Europe, China, and Asia with the exception of China from 2015 to 2022 on an announcement basis. Strategic sectors include chemicals, pharmaceuticals, batteries, electronic devices and components, measuring instruments, automobiles, and resources, etc. It shows that the US-China trade war in 2018, the covid-19 pandemic from 2019, and Ukraine war from 2022 have greatly influenced each country's investment as geopolitical risks. The graph shows the number of investments in each country, assuming the first quarter of 2015 as 100.　Following all values are preceded by [approximately]. In the United States, it showed some ups and downs, but it increased to 152, in 2019, at the third quarter. However, it decreased after 2020 and fell to 105, in 2021, at the first quarter. It then began to increase, reaching 143, in 2022, at the fourth quarter. In Europe, it peaked at 162, in 2019, at the first quarter, declined after 2020, and dropped to 114, in 2021, at the first quarter. After that, it started to increase and reached 133, in 2021, at the fourth quarter, but it decreased again from 2022, to 107, in 2022, at in the fourth quarter. In China, it continued to decline until the third quarter of 2017, reaching 68, and then rapidly increased to the peak of 117, in 2018, at the fourth quarter. After 2019, it declined again, dropping to 47, in 2020, at the fourth quarter, and returned to 57, in 2021, at the fourth quarter, but decreased again to 40, the lowest, in 2022, at the fourth quarter. In Asia, excluding China, it continued to decline until the second quarter of 2017, reaching 80, and then increased to the peak of 112, in 2018, at the second quarter, but decreased again to 50, the lowest, in 2021, at the first quarter. The graph curve was like that of China, but it gradually recovered to 72 in 2022.
  1. Note *1:

    Chemicals, Pharmaceuticals, batteries, electronic devices and components, measuring instruments, automobiles, resources, etc.

  2. Note *2:

    Based on the number of investments. Four-period moving averages with the 2015 Q1 as 100.

  3. Source:

    IMF World Economic Outlook (April 2023), "fDi Markets" (Financial Times)

Chart 1-6: Changes in Investment Destinations by Region
(Comparison of Q2 2020 to Q4 2022 and Q1 2015 to Q1 2020)
IMF, the International Monetary Fund conducted an analysis of changes in investment sources and destinations by region based on the number of cases over two time periods. The comparative periods are from the second quarter of 2020 to the fourth quarter of 2022 after the covid-19 pandemic, and from the first quarter of 2015 to the first quarter of 2020 before the covid-19 pandemic. The comparative seven regions are the U.S., the Americas excluding the U.S. (hereinafter referred to as the Americas), Advanced Europe, Emerging Europe, China, and Asia other than China and Japan (hereinafter referred to as Asia), and the Rest of the world. We will look at the deviation of the total investment relative to changes in the number of greenfield investments. Unit is % points. Investment from the U.S.: to the U.S.; no figures, to the Americas; 9.2 points, to Advanced Europe; 0.6 points, to Emerging Europe; 19.4 points, to Asia; 2.3 points, to China; minus 40.6 points, and to the Rest of the world; 21.6 points. Investment from the Americas: to the U.S.; 18.6 points, to the Americas; 27.3 points, to Advanced Europe; 14.9 points, and to Emerging Europe; 34 points, the highest overall, to Asia; 5.9 points, to China; minus 13.3 points, and to the Rest of the world; 27.6 points. Investment from Advanced Europe: to the U.S.; 7.5 points, to the Americas; minus 11.7 points, to Advanced Europe; 9.3 points, to Emerging Europe; minus 0.9 points, to Asia; minus 9.8 points, to China; minus 19.7 points, and to the Rest of the world; 8.6 points. Investment from Emerging Europe: to the U.S.; 27.6 points, to the Americas; 2.9 points, to Advanced Europe; 9.9 points, to Emerging Europe; 18.1 points, to Asia; minus 22.3 points, to China; 13.9 points, and to the Rest of the world; minus 11.5 points. Investment from Asia: to the U.S.; minus 3.2 points, to the Americas; minus 8.7 points, to Advanced Europe; minus 11.7 points, to Emerging Europe; minus 2.4 points, to Asia; minus 23.7 points, and to China; minus 49.2 points, the lowest overall, and to the Rest of the world; minus 4.4 points. ・Investment from China: to the U.S.; minus 22.1 points, to the Americas; minus 6.9 points, to Advanced Europe; minus 17.8 points, to Emerging Europe; minus 31.3 points, to Asia; minus 44.3 points, to China; no figures, and to the Rest of the world; minus 31.9 points. Investment from the Rest of the world: to the U.S.; 26.4 points, to the Americas; 7.1 points, to advanced Europe; 5.3 points, to Emerging Europe; 11.4 points, to Asia; minus 3.7 points, to China; minus 24.7 points, and to the rest of the world; 18.6 points. Overall, investment points from the Americas are high, and in particular, investment from the Americas to Emerging Europe has the highest growth of 34 points. On the other hand, all investments, from Asia, and China, to each country are negative points, and conversely, investment to China is also negative points, from all countries and regions.
  1. Note:

    Deviation from the change in the overall number of greenfield investments (aggregate change, -19.5%) between the two comparative periods. Note that Japan is not included here.

  2. Source:

    IMF World Economic Outlook (April 2023), "fDi Markets" (Financial Times)

JETRO Invest Japan Report 2023

Introduction

Chapter1. Inward FDI Trends in the World

  1. Section1.

    Global Inward FDI Flow in 2022

  2. Section2.

    Global Greenfield Investment in 2022

  3. Section3.

    Responses of Global Companies to Geopolitical Risks

  4. Section4.

    Changes in Global Investment Destinations due to Geopolitical Risks

Chapter2. Trends in Inward FDI in Japan

  1. Section1.

    Trends in Inward FDI to Japan

  2. Section2.

    Trends in Inward FDI to Japan by Country and Region

  3. Section3.

    Trends in Inward FDI to Japan by Industry

  4. Section4.

    Trends in Greenfield Investment in Japan

  5. Section5.

    Trends in Inbound M&A in Japan

  6. Section6.

    Long-Term Trends in Greenfield Investment Projects in Japan

  7. [Column 1]

    JETRO's initiatives for the entry of semiconductor-related companies into Japan

  8. [Column 2]

    With the recovery of inbound tourism, Japanese tourism assets is once again in the spotlight

  9. [Column 3]

    Promotion of More Active and Desirable M&A in Japan

Chapter3. Recent Government Measures

  1. Section1.

    Basic Policy on Economic and Fiscal Management and Reform 2023

  2. Section2.

    Action Plan for Attracting Human and Financial Resources from Overseas

  3. Section3.

    Green Innovation Fund Projects

  4. Section4.

    Fund for Advanced Semiconductor Production Infrastructure Development

  5. Section5.

    Project to Accelerate Biomanufacturing Revolution

  6. Section6.

    Subsidy for Development of Regional Data Centers

  7. Section7.

    R&D Project of the Enhanced Infrastructure for Post-5G Information and Communication Systems

  8. Section8.

    Innovative Information and Communication Technology Fund Project (Beyond 5G (6G) Promotion Fund Project)

  9. Section9.

    Establishment of a "New System" for Accepting Highly-Skilled Foreign Professionals (from April 2023)

  10. Section10.

    Startup Development Five-year Plan

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