Research Activities
Research Projects
Differences in variable factors by component of direct investment-Focusing on Japan's direct investment in China(2022_1_40_010)
Outline
Although the factors that cause fluctuations in direct investment have been theoretically organized, there is no consensus on what indicators should be used when demonstrating factors based on specific economic indicators. Direct investment consists of stock capital, which is the cross-border transfer of funds; reinvestment of income, which records retained earnings at a local subsidiary as reinvested; and debt capital, which is raised through a loan or other liability. It is type of a direct investment. However, if, for example, the accumulation of retained earnings (=reinvestment of earnings) is sufficient, is it possible that this will hinder the introduction of cross-border funds (=equity capital)? Also, is it possible that an increasing factor for one component is a decreasing factor for another component? Looking at the balance of foreign direct investment by country, only in China did the center of the increase change from stock capital to reinvestment income in the 2010s. Although stock capital is not increasing, the balance of direct investment is increasing due to the increase in reinvestment of earnings. If it can be demonstrated that the three components of direct investment have different factors of fluctuation, and that they are also in conflict with each other, it may provide an explanation for the lack of consensus on the factors of fluctuation in direct investment.
Period
April 2022 - March 2023
Leader of the Research Project
Hakozaki, Dai
Publications
The Ajia Keizai