Foreign Direct Investment in East Asia

Foreign direct investment (FDI) has played an important role in the economic development of the Asia-Pacific region. In the past, FDI was mainly from the Western industrialized countries such as the United States and Britain. Since the late 1980s, however, intraregional direct investment has been growing very rapidly, signifying an increasing economic integration and cooperation within the region. Japan, one of the economic superpowers, has become a major source of investment in the region. Moreover, the Asian newly industrializing economies (NIEs)—Hong Kong; Republic of Korea; Singapore; and Taipei, China—which have experienced remarkable economic growth, also invest substantially in other Asian developing countries

Hong Kong’s Role in Asian and Pacific Economic Development

Hong Kong is one of Asia’s four newly industrializing economies (NIEs) which have experienced very rapid economic growth in the past 25 years. While all of them have experienced export-oriented industrialization, there have been significant differences among them from the start of their rapid economic growth and development. Over time, their differences have become even more pronounced. It is very often asserted that the Asian NIEs can be divided into two groups: the Republic of Korea and Taipei, China on the one hand, and Hong Kong and Singapore on the other. Yet, there are in fact significant differences between the Republic of Korea and Taipei, China, and even more so between Hong Kong and Singapore

Changing Pattern of Financial Flows in the Asia-Pacific Region and Policy Responses

Foreign capital inflows play an important role in supplementing and complementing the resources of developing countries in their endeavor towards development. This has been emphasized repeatedly in the development economics literature—the vicious circle hypothesis, the two-gap model, and the Kindleberger-Hymer approach to foreign direct investment (FDI). The process of economic development even in the most successful cases is necessarily long and slow. It is therefore important that foreign capital inflow be continuous and relatively predictable and stable. Disrupted financial flows can be worse than no flows. Unfortunately, the postwar experience of financial flows to developing countries indicates a considerable degree of instability