This paper is one result of the project ‘The Investment Climate in East Asia: ICSEAD's Index for Ranking Locations’, which was undertaken by the International Centre for the Study of East Asian Development (ICSEAD) in fiscal years 2008–2009. Junichi Hasegawa was leader for most of the project (followed by the author), which also included Erbiao Dai and Chikashi Kishimoto. Shahrazat Binti Haji Ahmad provided key research assistance. The author is grateful for comments on earlier versions of this paper from project participants, Chih-Hai Yang and other participants of the Western Economic Association International's Pacific Rim Conference (24–27 March 2009, Ryukoku University, Kyoto, Japan), and participants of an ICSEAD Staff Seminar on 11 May 2010. The author is also grateful for comments from anonymous referees and editors. However, any remaining omissions or errors are the author's sole responsibility.
Ranking Locations for Japan's Manufacturing Multinationals in Asia: A Literature Survey Illustrated with Indexes*
Article first published online: 14 JUN 2011
© 2011 The Author. Asian Economic Journal © 2011 East Asian Economic Association and Blackwell Publishing Pty Ltd
Asian Economic Journal
Volume 25, Issue 2, pages 197–226, June 2011
How to Cite
Ramstetter, E. D. (2011), Ranking Locations for Japan's Manufacturing Multinationals in Asia: A Literature Survey Illustrated with Indexes. Asian Economic Journal, 25: 197–226. doi: 10.1111/j.1467-8381.2011.02057.x
- Issue published online: 14 JUN 2011
- Article first published online: 14 JUN 2011
- Received 12 May 2010; Accepted 17 January 2011
- Japanese multinational corporations;
- location determinants
This paper first reviews the voluminous, recent literature related to location choice by Japan's multinational corporations (MNCs) in Asian manufacturing. This review suggests that host economy size, labor costs (defined to include the influences of productivity and labor quality) and agglomeration of Japanese investors were among the most important factors influencing location choice by Japanese MNCs. However, evidence regarding a wide range of other potential determinants was more mixed. Principles underlying the literature review are then illustrated by constructing an index of investment attractiveness from 140 components used to measure the influence of 10 groups of determinants, and ranking the 11 largest Asian hosts to Japan's manufacturing MNCs in a baseline and 14 alternative scenarios. The baseline and four of the five alternative scenarios prioritizing local or export markets reveal China to be the most favorable location, usually followed by Singapore and Hong Kong. In nine alternative scenarios with lower weights on domestic and export markets but higher weights for cost factors, Singapore, followed by Hong Kong and China, were usually the most attractive locations. At the other end of the scale, India, Vietnam and the Philippines ranked lowest in the baseline and in most alternative scenarios, with Indonesia ranking slightly higher. Baseline index rankings were similar to rankings of affiliate sales for China, India, Vietnam and the Philippines, but diverged for the other seven economies.