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The 2011 mega-quake in East Japan seriously affected Japanese manufacturers in the Tohoku region. Disaster-hit firms shutdown their operation for a long period after the quake. This article examines what factors prolonged the recovery of plants, using Research Institute for Economy, Trade and Industry's (RIETI) survey of affected plants in the Tohoku area. Our study reveals that not only the loss of infrastructure, such as, electricity, water and transport, but also the collapse of the supply chain caused a nationwide fall in production and the breakdown of the supply chain extended the recovery period for plants even after the restoration of electricity, the industrial water supply and the transport network. Our study concludes that disaster-hit firms suffer for a longer period and can adversely affect firms untouched by disaster, if the recovery of the supply chain is delayed.

This paper examines whether the rank of Japanese firms' (using 12,504 firm level dataset) productivity sorts the modes of their internationalization and how firms' productivity affects their choice of export and FDI to destinations with similar income level. The empirical results in the paper demonstrate that the mode of firm's internationalization in selected regions shifts from non- internationalization to export, and from export to FDI as the productivity of firms rises. It confirms the theoretical prediction of the HMY model. The paper also finds empirical evidence that the productivity of firms internationalizing in multiple region is much higher than that of firms internationalizing in a single region, regardless of the mode of internationalization. This finding can be justified on theoretical ground that higher share in the global markets by a firm will require higher productivity.

Japan's foreign direct investment (FDI) began in the early 1950s but was conducted only on a small scale until the beginning of the 1970s. Until the 1970s, Japan's FDI was mainly in the mining sector for resource development, the commercial sector, and the labor-intensive manufacturing sector, directed toward developing countries. With the 1980s came deregulation of the financial sector as well as increased import barriers by major countries in North America and Western Europe, leading to an unprecedented increase in Japan's FDI in the finance and manufacturing sectors of these countries. The latter half of the 1980s was another period of a sharp increase in Japan's FDI, resulting from the large appreciation of the yen. Japan emerged as one of the top investor countries of the world. Except for resource development, government policies have neither restrained nor promoted FDI directly but have instead aimed at creating a generally favorable business environment in which FDI could be conducted.

During the period 2000-2009, offshore sourcing by Japanese firms to East Asian countries rapidly increased. Our survey on Japanese offshoring shows that 20 per cent of the Japanese companies are performing offshore sourcing and more than 50 per cent of the companies with 300 or more employees are conducting offshore sourcing in China and other East Asian countries mainly for the tasks of manufacturing parts and intermediate goods or assembling final goods. It is predictable that such an increase of offshoring stimulates the exit of firms with low efficiency from the market and raises the productivity of existing firms through a change of resource allocation within or between firms. Our empirical estimation based on the Japanese firm-level data shows that the productivity differs by 3 per cent between offshoring and non-offshoring firms and offshoring raises the productivity by 5 per cent ceteris paribus.