National Competitiveness of Japan
Japan is the third largest economy. It had been so successful and competitive before 1990. It has been in stagnation for two decades. This paper is going to examine if Japan still retains her national competitive advantage and as an attractive place for MNE from different internal analysis. There will be suggestions of how Japan can improve her international competitiveness.
Japan had experienced tremendously economic growth after World War II until 1980s. Nikkei stock market index has experienced a high hit of 40,000 in Year 1989. After the appreciation of yen, mistakes in fiscal policy and a serious bubble economy in 1990s, ...view middle of the document...
Prime Minister Shinzo Abe was re-elected after one year service from Year 2006 to 2007. He got majority votes from both lower house and upper house. Before Abe got reelected in December Year 2012, there was no Prime Minister could keep position more than 1 year. Though the transition is peaceful, the return of Abe regained unity and public confidence to the government. Abe's approval ratings were around 70 percent in 2013 .
The determination of having a more open Japan is getting obvious, which is a favorable factor to setting MNE in Japan. Japan has tried to build up a tighter relationship with the US and more economic and diplomatic networks with other countries. Prime Minister of Shinzo Abe has joined as a member of multiple international trade organizations such as Trans Pacific Partnership, EPAs, FTASs, APEC, WTO, OECD, the G-8 and the G-20. These 2 years, Abe visited France, India, Middle East, Africa, Latin America, Russia and Mongolia, etc. He also built a closer tie with US.
Shinzo Abe was perceived as right wing nationalism. Japan would not be an attractive place for Chinese investors. The relationship between Japan and East Asia has been getting strained because of the disputes over Senkaku islands (which China calls the Diaovus) and Abe’s visit to Yasukuni shrine. China has dropped from the first of export country to the second position in 2013 . The economic slowed down in China and the disputes with China since 2012 made an obvious drop in exports, especially automobile to China. Sales of Toyota Motor Corp export to China dropped 44% of deliveries in 2012 compared with the previous year. It is still declining of the export figure.
Among Asian countries or even around the world, corruption perceived index is low for Japan, it was the top 20 countries. MNE might not need to worry about bribery. However, in terms of government efficiency and bureaucracy were not competitive. Barriers for entry is high in Japan. Policy loans have been given to entrants, but a dominant part of them have been given to incumbent firms and to help the incumbents improve their competitiveness. Also, protectionism in Japan still prevails. Applying franchise and license is not
b. Economic situation
Economically, Japan did not perform well for more than two decades. Imports kept increasing while exports was gradually falling. Macroeconomic environment is not attractive, it ranked 124th out of 148 countries . Cost of living has been so high and yen was appreciated a great deal after 1990 , and made Tokyo as the most expensive cities for a number of years, until 2013. It implied the wages and rental are at very high cost.
Shinzo Abe tried to restore the economy and public confidence by implementing economic reform, it included several fiscal and monetary policy, and a structural reform in economy, which is so-called “Three Arrows”. The stock market has rallied 45 percent in Year 2013. Abe has an aim of achieving 2% of inflation and...