1. Markets and national policies 1 Globalisation is a process that is being energised with economic forces.

Because of globalisation, the production is spatially reorganised, international trade takes place in many countries and financial and other markets are integrated on many levels. But it is not an uniformed process, because every single type of production is in a different stage of development and also in a different location. Then the multinational enterprises strategies are very important, because it leads the direction of globalisation and its consequences. Because of globalisation, there is conflict between markets and managing policies. There are three types of markets: financial, goods and services and labour market. Financial markets are closely integrated worldwide and we can assume that they are creating a single and global capital market. Although there are some national capital markets that are trying to keep its national regulations, but their existence is not sustainable. They still hope to maintain their financial centres. Markets of goods and services are integrated at the regional economic level, so all the companies are able to operate at both small and also on large markets. European Union is an example of such regional economic integration. Labour markets are integrated on the national level and further integration has many obstacles, mainly because of laws of national governments. But higher integration of this market would be more beneficial. Then the labour intensive production could be moved to regions, where there would be cheap labour supply and so the cost would be saved. The integration is also possible on horizontal or vertical level. Speaking of horizontal level, company expands its business on the same levels of production, while vertical integration allows the companies to expand at different levels of production (then the firm owns the production process, suppliers, distributors, etc.)

Buckley P. J. and P. N. Ghauri (2004), Economic Geography and the Strategy of Multinational Enterprises; Journal of International Business Studies, Vol 35, No. 2, pp. 81-98, Palgrave Macmillan Journals.

2. Globalisation in Japan 2 When speaking about Japan, it is obvious that Japan looks like highly globalised country. It is exporting high technology products, cars, electronics, its companies are investing all over the world, it is the main economy in Asia and worlds third largest market. But according to the KOF Index of Globalisation (measures 3 main dimensions of globalisation: economic, social, political), Japan is on the 56th place according to the globalisation index. According to the economic globalisation, it is on 125th place. Few years ago, OECD become more interested in Japans globalisation development and found out that after the war, Japan was growing steadily with fast development, but rules of restriction made by the Japanese government prevented Japan from become more integrated economy. It has also negatively affected the FDI inflows. 2.1 Globalisation strategy

In the early 90s, Japan decided to eliminate the previous restrictions and open itself more to the rest of the world and trade, which resulted in presentation of its Globalisation strategy in 2006. This led to the increase in integration level, imports and number of foreign employees, although FDI still remained low. But despite all these facts, Japan is the least globalised country of all 34 members of OECD. I. Improve and expand human resources a. attractive environment, improved immigration system with less restrictions, upgraded human resources through better education system II. Strengthen international competitiveness a. more efficient agriculture b. increase the FDI to 5% of GDP (from 1% in 2001)
Jones, R. S. and T. Yoon (2006), Strengthening the Integration of Japan in the World Economy to Benefit more Fully from Globalisation, OECD Economics Department; Working Papers, No. 526, OECD Publishing. http://dx.doi.org/10.1787/371585541612
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III.

Strengthen the global competitiveness of regions in Japan a. increase the tourism to Japan to 10 million tourists by 2010 b. create multicultural societies

IV.

Foreign policy and contribution to international society a. negotiations of Economic Partnership Agreements should accelerate b. creation of East Asian Economic Zone c. improve the energy efficiency by 30% and be more oil independent (by 40% less)

V.

Japan in the world in 2010 a. stay highly competitive in global industry Companies in which foreign interests have a 25 % or more share account

for less than 4 % of total sales in manufacturing, and only about 2 % of total business sales in Japan. While individual companies like IBM, Coca Cola, Nestle and others have developed major positions in Japan over the yearsand positions that are wholly foreign ownedforeign companies as a whole are very much marginal to the total economy. 3. Leading indicators of Globalisation 3.1 Foreign direct investments

Foreign direct investments are investments made by a company from one country, into company based in another country. These investing companies have usually big influence on the companies that are receiving this investment. The more the economy is open, with educated labour forces and if it is growing steadily, the more attractive this economy is for investors from foreign countries. Concerning Japan, it missed out the main growth of FDIs. Its FDI flow was just 1% of GDP in 2010, which is the lowest of OECD countries. Speaking about the FDI outflows and inflows, the peak in OECD countries and EU 27 was in 2007, but in Japan one year later in 2008. This is when the financial crisis took place and since then the numbers are steadily growing down. According to the case of Japan, we can assume that the Globalisation strategy started up the FDIs, but then because of crisis, it couldnt grow any more.

Looking at the FDI outflows of 2010, OECD countries had outflow of 1 000 billion USD, EU27 436 billion USD and Japan only 56 billion USD, which is the lowest number among the OECD countries (with 1% share on its GDP). The FDI inflows are little bit lower: OECD had inflows of 650 billion USD, EU27 302 billion USD and Japan -1 670 billion USD (-0,02 share on its GDP). FDI outflows in millions of US dollars
Year 2004 2005 2006 2007 2008 2009 2010 OECD 830 686 779 342 1 187 954 1 931 682 1 632 647 911 890 1 003 586 Japan 30 963 45 831 50 243 73 545 127 981 74 698 56 276 EU27 379 718 604 508 686 543 1 252 600 962 403 386 789 436 725

FDI inflows in millions of US dollars

Year 2004 2005 2006 2007 2008 2009 2010 OECD 460 136 661 637 1 008 223 1 354 191 1 054 209 661 469 650 445 Japan 7 818 2 778 -6 503 22 548 24 417 11 938 -1 670 EU27 222 661 497 651 582 109 856 592 538 747 372 736 302 022

Source: OECD (2011), Foreign direct investment, in OECD Factbook. 2011-2012: Economic, Environmental and Social Statistics, OECD Publishing. http://dx.doi.org/10.1787/factbook2011-38-en

Source: OECD (2011), Foreign direct investment, in OECD Factbook. 2011-2012: Economic, Environmental and Social Statistics, OECD Publishing. http://dx.doi.org/10.1787/factbook2011-38-en

3.2

Trading indicators (GDP, imports, exports)

Putting FDIs aside, other important globalisation indicators are Gross Domestic Product (GDP), exports and imports of a particular country. GDP is the monetary value of all the finished goods and services produced within a country's area in a specific time period. Exports can be defined as good that are produced in domestic country and then shipped to foreign country for trading or selling purposes. Imports are then the opposite of exports, which is the goods that are shipped to domestic country from a foreign country. The GDP of all countries is steadily growing, although there was a slump in 2009 because of the financial crisis. The rates of exports and imports, which are measured in percentage of national GDP, were the highest in 2008 in all countries, but then it also fell down. Measuring the OECD countries, the share of exports on GDP is in average 25,8% and in 2010 it was 27,1%. In EU27, the average export share is 39,5% and in year 2010 it was 40,9%. Japanese average export share is 15,2% and this

number was also the same in 2010, which is also the lowest number among OECD countries. Imports have basically similar share on GDP in these countries. OECD had almost 27%, EU27 38% and Japan 14%. Year 2010 was close to the average numbers, with its 27,8% share within OECD, 39,9% share within EU27 and 14,1% in Japan. Japans tourism is also very low, with only 4 million tourists coming to Japan in 2005 and 17 million Japanese going abroad. Number of students studying abroad is not high and is lowering each year. In 2006, there were around 60 thousand Japanese students studying overseas, but in 2010 it is only around 40 thousand students. GDP in billions of US dollars
Year 2004 2005 2006 2007 2008 2009 2010 OECD 33 288 35 241 37 820 40 036 41 325 40 253 41 769 Japan 3 708 3 873 4 071 4 290 4 317 4 083 4 302 EU 27 9 033 9 507 10 309 10 983 11 452 11 180 11 338

GDP growth rates in %

Year 2004 2005 2006 2007 2008 2009 2010 OECD 3,2 2,7 3,2 2,7 0,2 -3,9 3 Japan 2,7 1,9 2 2,4 -1,2 -6,3 4 EU 2,2 1,7 3,2 3 0,4 -4,2 1,8

Source: OECD (2012), Size of GDP, in National Accounts at a Glance 2011, OECD Publishing. http://dx.doi.org/10.1787/na_glance-2011-3-en

Source: OECD (2012), GDP growth, in National Accounts at a Glance 2011, OECD Publishing. http://dx.doi.org/10.1787/na_glance-2011-4-en

Exports in % of national GDP

Year 2004 2005 2006 2007 2008 2009 2010 Average OECD 23,7 24,3 25,9 26,7 28 24,8 27,1 Japan 13,3 14,3 16,1 17,6 17,5 12,6 15,2 EU 36,7 38,1 40,4 41,5 42 36,6 40,9

Imports in % of national GDP

Year 2004 2005 2006 2007 2008 2009 2010 Average OECD 24,7 25,8 27,5 28 29,6 25,2 27,8 Japan 11,4 12,9 14,9 15,9 17,4 12,3 14,1 EU 34,7 36,6 39,2 40 41 35,3 39,5

25,7857 15,22857 39,457143

26,94285 14,12857 38,04286

Source: OECD (2012), Exports and imports of goods and services, in National Accounts at a Glance 2011, OECD Publishing. http://dx.doi.org/10.1787/na_glance-2011-15-en

4. Comparison of Japan to OECD in diagrams FDIs:

FDI outflows
2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 2004 2005 OECD 2006 2007 Japan 2008 EU 27 2009 2010

FDI inflows
1 600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 -200 000 2004 2005 2006 OECD 2007 Japan 2008 EU 2009 2010

GDP + growth rate of GDP:

GDP in billions US dollars

45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 2004 2005 2006 OECD 2007 Japan 2008 EU 27 2009 2010

Growth rates of GDP in %

6 4 2 0 -2 -4 -6 -8 OECD Japan EU 2004 2005 2006 2007 2008 2009 2010

Exports and imports:

Exports as % share on GDP

45 40 35 30 25 20 15 10 5 0 2004 2005 2006 OECD 2007 Japan 2008 EU 2009 2010

Imports as % share on GDP

45 40 35 30 25 20 15 10 5 0 2004 2005 2006 OECD 2007 Japan 2008 EU 2009 2010

FDI outflows = 0,06% of OECD amount FDI outflows EU = 13,5 % of OECD FDI inflows = 0,002 % of OECD amount FDI inflows EU = 60% OECD GDP = 12% of OECD GDP of EU = 30% OECD Exports = 0,08% of OECD Imports = 0,07 % of OECD Imports EU = 42,6% of OECD Exports EU = 46,4 % of OECD

5. Conclusion These numbers dont look very good in terms of globalisation, but Japan took some adjustments to be more globalised, as mentioned above, they prepared new Globalisation strategy: But despite all of this, the main problem of Japanese strategy is that Japan still has some barriers, that prevent Japan become more globalised. So what should Japan do to increase the ratio of MNEs in their country? For example relax product and labour market regulations, plus limitations in mergers and acquisitions. To lure more MNEs to Japan, it would be the best to free the investment environment, hire more foreign labour and reduce the trading barriers (lower the regulation of services, labour and goods market). With all of these, there are rational expectations that more FDIs will flow to Japanese economy. The strategy to export more than import is also not good, it is only one sided globalisation strategy which, for Japan, seems to be highly unproductive. Lately the gap between exports and imports has narrowed, so maybe it will contribute more to globalisation of Japan.