Understanding Foreign Direct Investment in East Asia

Willem Thorbecke and Nimesh Salike ()

No 290, ADBI Working Papers from Asian Development Bank Institute

Abstract: The authors recount East Asia’s experience with foreign direct investment (FDI). They document that, contrary to the Rybczynski theorem, capital flows in the region cause the host country’s labor-intensive industry to expand and its capital-intensive industry to decline. They also present narrative evidence that sheds light on how FDI is affected by the host’s country’s locational advantages, whether Asian FDI is footloose, and how the PRC has become the center of Factory Asia. Finally, they show that the evolution of production networks in the region can be explained partly by changes in the service cost of linking geographically separated production blocks relative to the cost saving arising from slicing up the value chain.

Keywords: east asia; foreign direct investment; production networks (search for similar items in EconPapers)
JEL-codes: F21 F23 O53 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2011-06-24
New Economics Papers: this item is included in nep-ifn, nep-int and nep-sea
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Understanding Foreign Direct Investment in East Asia (2011)
Working Paper: Understanding Foreign Direct Investment in East Asia (2011)
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