Table(7-1) shows that it is possible to say that the marginal productivity of capital invested for foreign production in North America(MPK*) played some roles in determining the movement of the Japanese foreign direct investment in North America. There is an increasing trend of MPK* from the year 1984 to the year 1988, that corresponds to the increasing trend of the FDI flows from the year 1984 to the year 1989. A close look at Table(7-1), however, reveals that the value of MPK* in 1986-1.614-is not consistent with the hypothesis expressed by the equation(4-1-c). According to the hypothesis introduced in Section 4, the value of the MPK* in 1986 must take the value between 1.024 and 1.517. This inconsistency of the MPK* with the hypothesis shows the incompleteness of the theoretical model that is based on the dynamic optimizations of the Japanese multinational firms. In other others, some factors other than the marginal productivity of capital invested for foreign production might have worked as FDI's determinants in this period, in particular in 1986.
When looking at the 1990s, roughly speaking, there is an decreasing trend of the MPK* from 1989 to 1993, while there is a declining trend of the FDI from 1989 to 1993. A close look at Table(7-1), however, reveals that the value of MPK* in 1991-1.133-is not consistent with the hypothesis that the larger the MPK*, the larger the FDI. If the hypothesis holds in 1991, the value of the MPK* in 1991 must take the value between 1.053 and 0.488. This inconsistency of the MPK* with the hypothesis, again, shows the incompleteness of the theoretical model and the strong possibility of the other factors' existence in that period.
Although there are theoretically inconsistent values of MPK* in 1986 and 1991, we can observe the overall theoretically consistent movement of the MPK* and the FDI from 1984 to 1993. This fact verifies the possibility that, as this paper hypothesized in Section 4, the marginal productivity of capital invested for foreign production in North America(MPK*) has played a significant role in determining the Japanese FDI flow there.
We must be, however, careful in assessing the empirical result above.