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July 14, 1995

[SSJ: 121] RE Japanese FDI in US

From: John C Campbell
Posted Date: 1995/07/14

I haven't studied FDI at all, but to add one impression: the idea of Japanese OEMs building plants in the US was extremely popular with state and municipal governments and with macroeconomic types in the first part of the 80s for obvious reasons; it was popular with unions then in the mistaken expectation that they could organize the new plants, and with the Big Three for more subtle reasons. One was just rhetorical--as I mentioned earlier, they liked to say it was immoral not to make cars where you sell them. But in part they also believed the argument, popular then as now, that manufacturers enjoyed all sorts of benefits in Japan that in effect allowed them to subsidize exports, so if they were making cars in the US on a level playing field they would not be so competitive.
So in the early 1980s everybody liked the idea--that is, all the organized interests, and it was easy to assume that the general public did too. But by a few years later, it had become clear that the prospect of the Japanese buying up America actually disturbed a lot of Americans. In fact it was a far more emotional issue even than Japanese exports to the US driving American companies out of business (let along questions of Japanese barriers to imports, which I think few Americans get excited about). I think it is that general public opinion level that changed the atmosphere regarding FDI of any type.

Approved by ssjmod at 12:00 AM