East Asian Globalisation

Towards the end of the 1980s Japan turned out to be the world's largest source of FDI. Although almost 40% of this went to North America, up to 80% of all FDI to developing nations went to the ASEAN countries(Association of South East Asian Nations) and China with Japan still the most significant investor in South Korea, Thailand and Indonesia2. This outward form of FDI, triggered by Japan, also came to be adopted by the other nations within the East Asian region. For example, FDI originating from South Korea and Hong Kong had a rapid surge after 1985 with a lot of investment going towards the ASEAN countries. The reasons behind the sudden flow in FDI to the ASEAN region could have been that there were low labour and costs which meant increased profit margins, those countries also undertook large reforms which gave special deals to foreign investors. Yet, even though Japan was the world's largest foreign direct investor, the low level of inward FDI coming from elsewhere was cited as evidence of the closed nature of Japan's market overtaken by government supported conglomerate firms known as the "Keiretsu". These firms were also looking to multi-nationalise, and so wanted to monopolise the Japanese market with as little foreign influence as possible. The case for South Korea was somewhat similar to this, as their markets were dominated by the Korean "Chaebol" with firms such as Daewoo and Samsung reaching international recognition very quickly. The exceptions to this were Hong Kong, which practised a very open market with low corporate tax and China, who, after the transition to a market-based economy in 1978 attracted large international investors because of their potential to become one of the largest economies in the world. China quickly became the second largest recipient of FDI after the USA. So did the East Asian region only reap benefits of the sudden flow of inward and outward FDI or were there some factors that caused unforeseen suffering to the newly industrialised and advanced nations of the region? First and foremost, the obvious benefits of MNCs and FDI comes the sharing and advancement of technology coupled with Research and Development(R&D).