Changing Character of Foreign Direct Investment from Developing Countries: Case Studies from Asia

FDI flows originating in developing countries have evolved in terms of increasing magnitudes as well as in terms of their motivations. In the initial round, developing country FDI were essentially horizontal in nature, generally destined to other developing countries seeking markets. Using case studies of FDI from selected Asian developing countries, the paper shows that since the mid-1980s, developing country enterprises have increasingly used FDI as a strategic tool for promoting their competitiveness abroad. This transformation has ensued from recent global trends of emergence of regional trading blocs, rising protectionism in the industrialised countries, and rising wages and currency appreciations in certain developing countries.