Vol. 6 Num. 1 - GCG: Revista de Globalización, Competitividad y ...

Melba Falck ReyesJapanese companies increased their investments assuming that such conditions would remain(The Economist April 2, 2009; Dewitt & Harris 2009). According to UNCTAD (2010), in2008 Japan was among a small group of developed countries that increase FDI outwardflows by as much as 74% to $128 billion. This growth was triggered by the TNs’ strong increasein cross-border equity investments oriented to domestic as well as foreign markets.49Table 6. Economic Growth for selected countries, 2007-2010 and forecast for 2011.Annual percentage changeJapanUnitedStatesMexico World2007 2.3 1.9 3.3 5.12008 -1.2 0.4 1.5 3.12009 -5.2 -2.5 -6.6 -0.82010 2.8 2.7 4.9 3.92011* 1.5 2.3 3.9 4.3Source: International Monetary Fund, World Economic Outlook Database.*IMF forecast.As the recession deepened, however, the reevaluation of the yen and the decrease in USconsumption has had a strong negative impact on the Japanese economy, especially in themanufacturing sector and in employment. The Japanese government responded with a broadprogram for the stimulation of the economy, centered on driving domestic demand, improvingefficiency in energy and improving the services to the elderly 6 . Considering that exports willhardly be a growth factor in the short run and that the increase in public expenditure islimited by Japan’s large public debt, all hopes are set on stimulating domestic consumption.Therefore, in 2009, TNs were affected by tighter credit conditions and rapidly declining salesand profits, both domestic and foreign, affecting their investment expenditures plans.In the case of the Mexican economy, the GDP in 2008 grew only 1.5% (one half of the previousyear) and for 2009 the economy suffered a deep downturn with a GDP drop of 6.6% (Table 6).The recession had a strong impact on the exporting sector due to its high dependence on theUS market, whose GDP contracted 2.5% in that same year. This crisis caught Mexico withsolid macroeconomic indicators (low inflation and fiscal deficit, high international reservesand a controllable trade deficit), but with an economy that has been losing internationalcompetitiveness. On top of that, the Mexican economy was badly affected in 2009 by theimpact of the H1N1 influenza. This seriously affected tourism, an important source of foreigncurrency for Mexico, and also the services sector, especially the activities of restaurants andtransportation.Under this somber outlook, in 2009 trade and investment flows diminished in an importantway (Graph 1). Regarding Japanese inward FDI, the director of JETRO in Mexico, TadashiMinemura, announced that: “the interest of Japanese companies to invest in Mexico isparalyzed”, especially because one of the sectors most affected by the crisis in the world6. Kyodo News, “Aso unveils growth plan to double Asia economy by 2020”, 9 April 2009.GCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 36-54