This paper has argued that the marginal productivity of capital invested for foreign production and domestic production are essential to determining the movement of the Japanese foreign direct investment in North America. The empirical study in this paper verifies that the marginal productivity of capital invested for foreign production in North America(MPK*) has played an important role in determining the Japanese FDI movement from 1984 through 1993. The marginal productivity of capital invested for domestic production in Japan(MPK), however, is not verified as a significant determinant of the Japanese FDI in North America.
Since there are many assumptions in the theoretical and empirical models used in this study, one cannot rush into conclusion that the marginal productivity of capital invested for foreign production is the largest determinant of the Japanese FDI and the marginal productivity of capital invested for domestic production in Japan is not. But one can say that there is a strong possibility that the marginal productivity of capital invested for foreign production in North America has played important roles in determining the Japanese FDI movements in North America in the late 1980s and the early 1990s.