Abstract
This report aims to clarify the patterns and functions of direct foreign investment made by smallscale Japanese industries in the 1970s. In this decade there were two increasing trends in their investment. In 1972 and 1973 they rushed into Korea with the purpose of producing mainly sundry goods. In the latter part of the 1970s, their target was Singapore, where they engaged in manufacturing parts for electric machinery. In the former, the small industries were independent producers; in the latter, they acted as sub-contractors for larger assemblers. The investments of small Japanese industries should contribute to economic development in developing countries through the transfer of labor habits, labor ethics, technology, management know-how and so forth. Independent producers of sundry goods are useful for developing countries at the stage of industrialization of the labor-intensive light-manufacturing sector, while a number of sub-contractors can support further industrial development there in heavy industries and chemicals. The investment of small industries acting as sub-contractors is particularly noteworthy in representing the transfer of the Japanese pyramid-type production system to developing countries.
