Managing Investment: the United States’ Responses to Japan’s Direct InvestmentZhong Feiteng

　　Assistant Research Professor, Institute of AsiaPacific Studies, Chinese Academy of Social Sciences

　　Abstract: This article analyses the US’ responses to the challenges of Japan’s direct investment between 1985 and 1993. It applies the interest-institutional framework pioneered by second generation international political economy scholars to uncover the US’ responses at three different levels of analyses: state-level, domestic level, and international level. The US Federal government, the state governments and other local governments have different objective functions when dealing with foreign direct investments from Japan; for the federal government, its attempt to locate the fine balance between preserving state security and maintaining competitiveness has resulted in stringent measures against Japan’s investments in mergers and acquisitions; whereas for the state and local governments, increasing tax revenues, improving employment rates and considerations for general economic growth are key impetus to welcome investments from Japan. In this scenario, at the international level, Japanese and American multinational companies share broad, overlapping interests. In order to alleviate the conflict of interests between the two countries, as well as to extent their interests, these companies have since turned to international institutions for help, leading the establishment of direct investment regimes in the Uruguay Rounds.