Abstract for: Negative Deindustrialization: Japanese Experiences
The strongest yen’s appreciation in 2011 made many Japanese companies choose overseas operations. The general public is worrying that this choice may put them out of work. Contrary to this public debate, academic debate argues that deindustrialization is the natural outcome of the successful economic development in advanced economies. However, there are several evidences to prove that current Japanese deindustrialization is a negative one. Why does Japanese economy fail to realize positive deindustrialization along the lines of the USA, Netherlands, or Norway? This paper develops a system dynamics model and examines important features of negative deindustrialization. Foreign direct investment largely affects manufacturing employment and productivity in the non-industrial sector.