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Japan Latin America
In the 1970s, Japan briefly showed enthusiasm over
Brazilian
prospects. A vast territory richly endowed with raw
materials and
with a sizable Japanese-Brazilian minority in the
population,
Brazil appeared to Japanese business to offer great
opportunities
for trade and investment. However, none of those
expectations have
been realized, and Japanese financial institutions became
caught up
in the international debt problems of Brazil and other
Latin
American countries.
In 1990 Japan received US$9.8 billion of imports from
Latin
America as a whole and exported US$10.2 billion to the
region, for
a surplus of US$429 million. Although the absolute value
of both
exports and imports had grown over time, Latin America had
declined
in importance as a Japanese trading partner. The share of
Japan's
total imports coming from this region dropped from 7.3
percent in
1970 to 4.1 percent in 1980, remaining at 4.2 percent in
1990.
Japan's exports to Latin America also declined, from 6.9
percent in
1980 to 3.6 percent in 1990.
Despite this relative decline in trade, Japan's direct
investment in the region continued to grow quickly,
reaching
US$31.6 billion in 1988, or 16.9 percent of Japan's total
foreign
direct investment. This share was only slightly below that
of 1975
(18.1 percent) and was almost equal to the share in Asian
countries. However, over US$11 billion of this investment
was in
Panama--mainly for Panamanian-flag shipping, which does
not
represent true investment in the country. The Bahamas also
attracted US$1.9 billion in investment, mainly from
Japanese
financial institutions but also in arrangements to secure
favorable
tax treatment rather than real investments. Brazil
absorbed US$5
billion in Japanese direct investment, Mexico absorbed
US$1.6
billion, and other Latin American countries absorbed
amounts below
US$1 billion in the late 1980s.
Latin American countries lie at the heart of the Third
World
debt problems that plagued international financial
relations in the
1980s. Japanese financial institutions became involved as
lenders
to these nations, although they were far less exposed than
United
States banks. Because of this financial involvement, the
Japanese
government was actively involved in international
discussions of
how to resolve the crisis. In 1987 Minister of Finance
Miyazawa
Kiichi put forth a proposal on resolving the debt issue.
Although
that initiative did not go through, the Brady Plan that
emerged in
1989 contained some elements of the Miyazawa Plan. The
Japanese
government supported the Brady Plan by pledging US$10
billion in
cofinancing with the World Bank and the IMF.
Data as of January 1994
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