The Hard Disk Drive Industry in the Philippines and Japanese Direct Investments

Abstract

The study explores in depth the phenomenon of the overseas spread of Japanese computer industry, by focusing on the FDI behavior of a segment of the industry, namely that of the hard disk drive (HDD) sector. It studies the various motivations for the choice of the Philippines both by Japanese HDD assemblers and by their suppliers, based on a firm-level survey conducted in 1997-98 in the Philippines and in Japan. It examines why the Japanese HDD assemblers have strategically chosen to locate mainly in the Philippines, in contrast with American HDD firms geographic spread, which took mainly the Asian mainland route, from Singapore to China, passing through Malaysia and Thailand. The study likewise attempts to evaluate the validity of other possible motivations, namely: the imitative or ¡°bandwagon¡± behavior of Japanese investors, the dispersion motive, the depending motive, as well as motivations based on possibilities for agglomeration among them. Finally, the study examines the strengths and weaknesses of the country policy regime in attracting Japanese direct investments into the industry.