Japan's tourism-led foreign direct investment inflows: An empirical study

This study analyzes international tourism-inward foreign direct investment (FDI) relationships by applying dynamic panel models to Japanese data for the 1996-2011 period. A growing number of studies have examined this topic following the publication of the UNCTAD (2007) report; however, the current literature is inadequate. Our analysis is not restricted to tourism-related FDI such as hotels and restaurants, as in the literature, but covers general FDI in the framework of FDI dynamics, because tourism-FDI interactions are not in reality restricted to typical tourism-related FDI. The analysis results reveal that enhanced inbound foreign tourism exhibits spillovers of inward FDI beyond tourism-related sectors. Hence, although policies related to FDI promotion and tourism enhancement are often planned, executed, and evaluated independently under different government jurisdictions, coordination is recommended, because these policies interact with each other in efforts to attain economic development goals.