Abstract

The purpose of this study is: (1) to examine the determinants of economic growth in Japan over time, and (2) to see if there is any time-series support for FDI-led growth hypothesis in Japan. To achieve these goals the study uses a model that is based on the postulates of de Mello. Employing a 35-year period of annual data, the model is estimated by using the Beach-Mackinnon technique, which corrects for autocorrelation. The estimation results suggest: (1) the major determinants of economic growth in Japan are total factor productivity, and domestic investment growth; (2) there are no causal relationships between foreign direct investment growth and economic growth in either direction; and (3) there are no causal relationships between foreign direct investment growth and total factor productivity growth in either direction.

Recommended Citation

Asheghian, Parviz (2009) "Determinants of Economic Growth in Japan: The Role of Foreign Direct Investment," Global Economy Journal: Vol. 9 : Iss. 3, Article 9.
DOI: 10.2202/1524-5861.1509
Available at: http://www.bepress.com/gej/vol9/iss3/9