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Title:Understanding foreign direct investment in East Asia PDF Logo
Authors:Thorbecke, Willem
Salike, Nimesh
Issue Date:2011
Series/Report no.:ADBI working paper series 290
Abstract:We recount East Asia's experience with foreign direct investment (FDI). We 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. We 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, we 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.
JEL:F21
F23
O53
Document Type:Working Paper
Appears in Collections:ADBI Working Paper Series, Asian Development Bank Institute

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