Japan's U.S. Investment Dynamic: Reflections on the Economic Contributions Made by Japanese Companies
Nov 05, 2019
The objective of Japan’s U.S. Investment Dynamic; Reflections on the Economic Contributions Made by Japanese Companies is to provide current and clear economic data to show the growth and commitments by Japanese companies’ investments in the U.S. economy.
Japan remains the third-largest global economy and fourth leading exporter. It is a nation similar to the United States which possesses cutting-edge engineering skills, a deep sense of work ethic, and state-of-the-art technologies and products. Both American and Japanese companies are dedicated to making quality products and developing human talent. In this sense, the US-Japan bilateral economic relationship is based on the mindset of Monozukuri - embracing quality throughout the company and producing state-of-the-art products.
During the past three decades, hundreds of Japanese company representatives have brought their families to the United States where they have contributed to and play active roles in their new American hometowns. And thousands of American working men and women have found more than jobs and these Japanese companies; they have built careers.
KEY FINDINGS OF THE JAPAN-U.S. INVESTMENT DYNAMIC
1.) Since 1990, Japanese investment in the U.S. has steadily grown to $477 billion, which is at a record level in the time span.
2.) According to the JETRO survey on business conditions for Japanese companies in the U.S. since 2012, more than 50% of Japanese manufacturers have reported plans to expand their businesses in the U.S.
3.) More than 40% of Japanese manufacturers have increased employment in the U.S. every year since 2011. Data shows that total U.S. employment by Japanese manufacturers in 2016 amounted to 397,000 American jobs.
4.) Exports by Japanese companies account for approximately 6% of the total value of U.S. exports (0.5% of GDP) - the highest among all foreign countries, and at record high levels for 2015 and 2016.
5.) Investment in research & development continues to grow. In 2016, the total value of Japanese companies' R&D investment in the U.S. increased by $8 billion, and at a record high level.
JAPANESE DIRECT INVESTMENT IN THE U.S. HAS STEADILY INCREASED
Year-after-year since 1990, Japanese direct investment in the U.S. has steadily grown. Based on 2017 data, investment in the United States from Japan now stands at a record level of $477 billion in cumulative investment stock, a phenomenal 98.6% increase from just 8 years ago.
JAPAN'S INVESTMENT IN AMERICA'S AUTOMOTIVE SUPPLY CHAIN REMAINS STRONG
The American automotive industry in particular has drawn remarkable investments from Japan in recent years. In the U.S. manufacturing and logistics sectors, Japan invested in 785 new projects between January 2008 to June 2018, an average of 75 projects per year. These Japanese investments have been particularly beneficial for the economies of midwestern states like Indiana, Tennessee, and Kentucky, which thrive off manufacturing.
JAPANESE BUSINESS EXPANSION IS AN ONGOING TREND
Economic optimism in America is driving Japanese businesses to expand their U.S. operations. Over 50% of Japanese-affiliated manufacturers operating in the U.S. since 2012 have reported plans to expand their operations within 1-2 years, based on JETRO's 2018 "Survey on Business Conditions of Japanese Companies in the United States".
JAPAN'S CONTRIBUTION TO U.S. EMPLOYMENT
Among foreign direct investors, Japanese companies in the U.S. rank in the Top 3 for the total number of employees in 23 U.S. states (2016).** This is especially true in the Midwest, South, and West Coast.
**Source: U.S. Department of Commerce, Bureau of Economic Analysis
EXPORTS BY JAPANESE COMPANIES IN THE U.S. CONTINUES TO GROW
A record level of approximately 400,000 Americans were employed by Japanese manufacturers in the U.S., the largest by any foreign investor in 2016. This is a phenomenal increase of 37% (107,600 manufacturing jobs) compared to 2010.
JAPANESE CONTRIBUTIONS TO U.S. EXPORTS CONTINUES TO GROWS
Total exports by Japanese companies in the U.S. amounted to $86.6 billion in 2016, a 66% increase since 2007. This represents 6% of total US exports (0.5% of GDP), larger than most other nations.
JAPANESE EXPENDITURES IN U.S. RESEARCH & DEVELOPMENT 2ND AMONG FOREIGN G7 COUNTRIES
Japanese companies provided the U.S. Research and Development sector with over $8.05 billion dollars in expenditures in 2016 - an 82.3% increase compared with 2007. This marks the second-largest expenditure increase among all G7 countries!
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