Foreign Direct Investment in Asia

This paper analyses trends in FDI in Asia, with a special focus on FDI flows from Japan. It relates FDI flows to changing industrial structure and to trade flows. An econometric analysis is done to identify key determinants of FDI flows to Asian countries. Japan has been the main source of FDI flows to Asia. Japanese FDI has helped cost reduction and export promotion in the host countries. But, in the process, Japan has created a large trade surplus with these countries.