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RUMUN 2008
Committee: United Nations Conference on Trade and Development (UNCTAD)
Country: Japan
Topic: Foreign Direct Investment in Developing States
Delegates: Jonathan Kourgialis and Terence Kim, Ramapo High School
Over the past few decades, Japan’s economy has been growing at unprecedented
rates to become what is now considered the second most technologically powerful
economy in the world. Due to “government-industry cooperation, a strong work ethic,
mastery of high technology, and a comparatively small defense allocation (1% of GDP)”
(CIA World Factbook), Japan’s overall real economic growth has been spectacular, with
a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s.
With such a large and powerful economy, Japan has had a huge surge in outward foreign
direct investment since the 1980’s, almost reaching 70 billion dollars of investment in
1989. Outflows have greatly exceeded inflows by more than a factor of ten, as many
Japanese businesses seek cheaper labor and natural resources unavailable to them in their
home country. While Japanese foreign direct investment was initially destined for
countries such as the United States, the recession of the 1990s caused a reversal in the
focus of the Japanese MNCs as they begin to look to developing Asian countries for
investment. Japan has become so prevalent in foreign direct investment that “[i]n 2005,
84 of the top 100 MNCs originated in what UNCTAD has called ‘the Triad,’ comprised
of the United States, Japan, and the European Union (EU), while 72 of the 100 are based
in one of only five countries: the US, Japan, France, Germany and the United Kingdom”
(IDIA).
With such a large economy, Japan has become one of the world’s most giving
nations. Today, “Japan, once the world's biggest donor nation, is stepping up efforts to
boost its influence in resource-rich developing countries by creating a super agency that
will dispense billions of dollars a year in foreign aid, most of it bound for Africa and
Asia” (Masters). Such a plan further demonstrates our focus on helping others develop.
With this unselfish focus, while considering how integral foreign direct investment has
become for Japan’s economic success, it is obvious Japan would support UNCTAD’s
campaign to use foreign direct investment as a tool in helping the economies of
developing nations. The prospect of “killing two birds with one stone,” by generating
business while at the same time developing an economically struggling nation, is
something Japan fully endorses and will continue to do while it can. We encourage that
our MNCs and those of other countries always look to always promote economic
development abroad, especially in countries where technology and jobs are desperately
needed.
For foreign direct investment in developing countries to have its most powerful
impact, the United Nations needs to create firm guidelines for both the investor and
recipient to follow as closely as possible. It is understood that these guidelines may not
always be enforced, but if MNCs are willing to cooperate, the chances for global growth
may increase. First, restrictions in reference to the environment must be designed to
prevent further abuse of this planet. Labor laws and regulations should then follow (even
if developing countries do not have their own), in an effort to always protect the rights of
the worker when possible. The UN should then create a list of all countries which want
UNCTAD – Foreign Direct Investment in Developing States (Japan), page 1 of 2
and would accept foreign direct investment in their country. With this list, the UN could
divide the nations into categories based on their financial situations, and attempt to give
positive financial incentives to MNCs which are willing to invest in the poorest and least
developed nations. Because these companies are receiving financial compensation, they
must follow all environmental and labor guidelines set by the UN, and should also put the
development of the foreign country before their own profits. MNCs should also be
forced to buy the natural resources they need from the countries they are in to increase
the national revenue of the developing nation. Japan believes that the UNCTAD should
keep close watch over such investments and give advice to developing countries on how
to negotiate with the MNCs. Through careful planning and research, Japan believes the
economies of developing nations can drastically improve, while businesses can continue
to grow and expand if such ideas are implemented.
Works Cited
Bayoumi, Tamim, and Gabrielle Lipworth. “Japanese Foreign Direct Investment and Regional
Trade.” Finance & Development. Sept. 1997. 7 Nov. 2008
<http://www.imf.org////////.pdf>.
Long, Breannae. “Foreign Direct Investment.” www.idia.net. Rutgers Model United Nations. 7
Nov. 2008 <http://www.idia.net/.aspx>.
Masters, Coco. “Japan to Dispense Billions in Foreign Aid.” Time. 3 Oct. 2008. 7 Nov. 2008
<http://www.time.com////0,8599,1847030,00.html>.
UNCTAD – Foreign Direct Investment in Developing States (Japan), page 2 of 2