Capital in Flight: Japanese Investment and Japanese Air Service in the United States During the 1980s

The relationship between Japanese air service to the US and Japanese direct investment in the US during the 1980s is examined. It is argued that regions receiving more air service to Japan could receive more direct investment because greater accessibility to Japan facilitates freight and passenger transport between the 2 countries and that flights between the US and Japan generate flows of information that create greater awareness of investment opportunities on the part of Japanese investors. The hypotheses are tested independently using a pooled, cross-sectional data set consisting of the number of nonstop Japanese flights and the amount of Japanese direct investment for the 1982-1987 period. Results strongly suggest that there is a linear relationship between per capita investment and the total flights, which supports the information bias theory but not the accessibility theory.