I focus on Japan because in the study of Herzer (2008) only one Asian country, Japan, is included in his sample. The selection of Japan in this study is based on its closer link with other East Asian countries, such as Indonesia, Malaysia, Thailand and China, in terms of direct investment and trade activities. Japan is the major provider of FDI into these countries. In addition, during the 1980s, Japan was the world’s most prominent outward investor (Head & Ries, 2005).