Japanese firms are more debt-oriented in nature;Study

Mumbai, Sep 5 (UNI) Compared to their American counterparts, Japanese firms are more debt-oriented in nature, says an award-winning study by Dr Rashmi Banga. She has produced a number of financial ratios in support of her study.

Ms Banga was awarded with the Exim Bank International Economic Development Research Annual (IEDRA) Award for the year 2005 by the visiting senior research fellow of Institute of Southeast Asian Studies, Singapore, S T Devare, in a function held here today.

He also released Exim Bank's Occasional Paper based on the award winning thesis on the occasion. The award, which was instituted in 1989, carries a prize of Rs 1 lakh and a citation. The topic of her doctoral dissertation is 'The nature, pattern and impact of Japanese and US foreign direct investment (FDI) in Indian manufacturing'.

The period of study is 1993-94 to 1999-2000. She has obtained her doctorate from University of Delhi in 2005 and at present is employed with the UNCTAD-India Programme.

Prior to it, the CMD of the bank, T C Venkat Subramanian, emphasised the importance to enhance investment-related research for providing policy recommendations towards achieving higher levels of investment in the days to come. The chairman of award jury, D M Nachane, was also present on the occasion.

Interestingly, there are many more distinctive features in her study that reveal the differing nature of the FDIs by the two countries in India. The study says that , as compared to US firms, Japanese firms operate at a lower scale of production, with lower capital intensity but higher rate of output growth.

According to the study, US FDI is mainly found to be concentrated in sectors like pharmaceuticals, organic chemicals, electrical components, food processing and personal care. In contrast, Japanese FDI is found to be concentrated more in automobiles and auto parts, electronic consumer goods and glass&glass products.

Similarly, the study says that Japanese FDI is found to be attracted to large-scale, labour intensive, low-tech industries that produce standardised products and have high outward orientation.

Whereas US FDI is found to be attracted to concentrated industries that are domestic-market oriented, produce differentiated products, have low degree of outward orientation and high degree of vertical integration.

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