Since 1977, and in some cases starting before that, most East Asian countries’
export patterns in manufacturing have been transformed from industry distributions
typical of developing countries to distributions more like those of advanced countries.
The process of change in most cases started with inward FDI to produce for export
in the new industries, particularly by U.S. firms in electronics and computer-related
machinery. The U.S. firms were followed, in electronics, by Japanese multinationals.
Over time, in most cases, the U.S.-owned affiliates turned more to sales in host-country
market and their share in host country exports declined, although the host countries’
specializations in the new industries continued. U.S. and Japanese firms played somewhat
different roles. U.S. firms’ investments were always distributed more along
the lines of U.S. export comparative advantage, far from the previous patterns of
the host countries. The industry distribution of Japanese investments initially followed
more the lines of the host countries’ comparative advantage and Japanese affiliates
were less export-oriented than U.S. affiliates. However, Japanese affiliates have
become more like U.S. affiliates in both export orientation and industry composition.
Their early concentration in textiles and apparel faded and they are more heavily
concentrated than U.S. affiliates and more export-oriented in both electrical machinery
and transport equipment.