Ranking Locations for Japan's Manufacturing Multinationals in Asia: A Literature Survey Illustrated with Indexes*

Abstract

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.

Manufacturing facility location and sustainability: A literature review and research agenda

“…In table 5 we structure and summarize the factors as well as provide reference to the literature sources. The structure is based on the Environmental Performance Index (EPI, 2010), the Sustainability Reporting Guidelines by the Global Reporting Initiative (GRI, 2012), and location factors by Dou and Sarkis (2010), Ramstetter (2011), and Somlev and Hoshino (2005). The table provides a three-level structure of the three dimensions, identifying literature sources that take the respective factors and sub-areas into account.…”

Race‐to‐the‐bottom Tariff Cutting

“…Similarly, Fukao and Wei () show that tariffs are negatively correlated with Japanese vertical FDI in manufacturing. Also, according to Ramstetter (), of the 25 mainly Japanese multinationals operating in Thai machinery in 1994, 15 identified import regulation as an important problem, but only six identified infrastructure bottlenecks.…”