Multinationals in East Asian Production and Trade

Foreign direct investment (FDI) is one of the main avenues for the move-ment of technology and modern business methods across national bor-ders. FDI from more developed countries is presumably more likely to carry advanced technology than that from developing countries. Among the developing countries, those in Asia have been more receptive to inward direct investment than those in other regions. Of all the direct investment by developed countries in the developing countries of Asia, the United States and Japan account for by far the largest shares. Together they were responsible for over 80 percent of the outward FDI stock from developed countries at the end of 1996 (OECD 1998). This combination of the importance of FDI to Asian host countries and the importance of the United States and Japan in FDI in Asia is the motivation for the focus in this paper on the roles of U.S. and Japanese multinational enterprises (MNEs), in particular the affiliates of these MNEs, in the growth and composition of production and trade in th