RIEB Discussion Paper Series No.2019-18

RIEB Discussion Paper Series No.2019-18


Reappraisal of Japan-LAC Trade and Investment Relations Amid China's Ascendance


Though LAC's bilateral trade with Japan has not been as buoyant as that with China in recent years, Japan's trade relations with the region is more diversified and balanced in terms of trading partners, product composition, and trade balance. Furthermore, business activities of Japanese subsidiaries operating in the region are conducive to employment creation, export expansion (especially to third-country markets), and global value-chain developments in the region. In addition, Japan's FDI flows to LAC fare quite well when compared with those from China in both quantitative and qualitative respects: Japan's FDI stock is high and is diversified among targeted industries, thereby contributing to technological transfer and human resource development. Moreover, Japan has been a significant source of development finance for the LAC region; the present scale of JBIC's operations in Latin America rivals those of Chinese policy banks. The nature and scope of JICA's activities in LAC suggest the relationship between Japan and the LAC region has transformed from "Japan as donor and LAC as recipient" to "Japan-LAC global partners." As a result of the preceding, LAC nations are increasingly viewed by Japan as essential economic and political partners as Japan promotes its model of cooperation and economic governance in the Asia-Pacific region and globally. In short, cooperation has been an integral part of the Japan-LAC relationship, demonstrating how interactions in the private sector open space for government-to-government cooperation and vice versa. Strengthening commercial relations with Japan by reciprocally applying the public-private partnership (PPP) principle will assist LAC countries in addressing some structural problems and challenges of long data.


Research Fellow of Kobe University Research Institute for Economics and Business (RIEB) and Managing Director of the Japan Association of Latin America and the Caribbean (JALAC).