In the late 1980s that witnessed the dramatic rise of the Japanese outward FDI, it was often argued that the Japanese multinational firms resorted to FDI in order to avoid the trade frictions against the major countries. This argument, at that time, seemed to be widely accepted among many people, because people believed that the FDIs take places of the exports and diminish the trade surplus. But one have to ask, ``Did the Japanese multinational firms really take the avoiding trade frictions into account when they made decisions on FDI?''
The theoretically-based empirical result in this paper implies that there were few possibilities that the Japanese MNCs take the trade frictions seriously in making decisions on FDI. Aside the marginal productivity of capital invested for the domestic production in Japan(MPK), the movement of the estimated marginal productivity of capital invested for production in North America(MPK*) can be said to be consistent with the hypothesis which springs from the dynamic optimizations of the Japanese MNCs, that is, the behavior of maximizing the present value of net cash flow. This implies that the Japanese MNCs made decisions on FDI by taking into considerations the dynamic profit maximization. If this implication is true, there is a strong possibility that the avoidance of trade frictions did not play significant roles as a major motivation for the Japanese MNCs to increase their FDI overseas in the late 1980s.