@article{ART003317490},
author={song yu fei and chui jian},
title={The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan},
journal={Journal of Asia-Pacific Studies},
issn={1225-8539},
year={2026},
volume={33},
number={1},
pages={159-197},
doi={10.18107/japs.2026.33.1.006}
TY - JOUR
AU - song yu fei
AU - chui jian
TI - The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan
JO - Journal of Asia-Pacific Studies
PY - 2026
VL - 33
IS - 1
PB - Institute of Global Affairs
SP - 159
EP - 197
SN - 1225-8539
AB - Foreign direct investment (FDI) has long been regarded as a key driver of technological innovation in host economies. However, for countries that have already reached the global technological frontier, the impact of inward FDI on technological innovation remains an open empirical question. This study investigates the effect of FDI on technological innovation in Japan using panel data from16 representative industries over the period 2005–2020. Technological innovation is proxied by total factor productivity (TFP), calculated based on the Solow growth model, and the analysis employs a two-way fixed effects model that controls for both industry-specific and time-specific heterogeneity. The empirical results indicate that inward FDI exerts a statistically significant inhibiting effect on technological innovation across Japan’s overall industrial sector. This inhibitory effect is particularly pronounced in manufacturing industries, including the chemical and pharmaceuticalsectors,aswellasindesignatedcoreindustries.Furthermore, the impact of FDI on technological innovation exhibits a double threshold effect with respect to the scale of industrial development. Specifically, when industrial scale remains below the first threshold, inward FDI promotes technological innovation. Once the first threshold is exceeded, however, the positive effect of FDI turns into an inhibiting effect, and after surpassing the second threshold, the magnitude of this inhibitory effect gradually diminishes as industrial scale continues to expand. These findings offer important policy implications for technologically advanced economies that are close to the technological frontier and deeply embedded in global value chains, highlighting how such economies can achieve a dynamic balance between technological innovation and external openness by optimize the structure of foreign direct investment at different stages of industrial development.
KW - Foreign Direct Investment;Technological Innovation;Inhibiting Effect;Double Threshold Effect;Japan
DO - 10.18107/japs.2026.33.1.006
ER -
song yu fei and chui jian. (2026). The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan. Journal of Asia-Pacific Studies, 33(1), 159-197.
song yu fei and chui jian. 2026, "The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan", Journal of Asia-Pacific Studies, vol.33, no.1 pp.159-197. Available from: doi:10.18107/japs.2026.33.1.006
song yu fei, chui jian "The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan" Journal of Asia-Pacific Studies 33.1 pp.159-197 (2026) : 159.
song yu fei, chui jian. The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan. 2026; 33(1), 159-197. Available from: doi:10.18107/japs.2026.33.1.006
song yu fei and chui jian. "The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan" Journal of Asia-Pacific Studies 33, no.1 (2026) : 159-197.doi: 10.18107/japs.2026.33.1.006
song yu fei; chui jian. The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan. Journal of Asia-Pacific Studies, 33(1), 159-197. doi: 10.18107/japs.2026.33.1.006
song yu fei; chui jian. The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan. Journal of Asia-Pacific Studies. 2026; 33(1) 159-197. doi: 10.18107/japs.2026.33.1.006
song yu fei, chui jian. The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan. 2026; 33(1), 159-197. Available from: doi:10.18107/japs.2026.33.1.006
song yu fei and chui jian. "The Impact of Foreign Direct Investment on Technological Innovation in the 21st Century: Evidence from Japan" Journal of Asia-Pacific Studies 33, no.1 (2026) : 159-197.doi: 10.18107/japs.2026.33.1.006
