FDI, Industrial Labor Transformation and Growth: The Cases of South Korea, Malaysia, and Thailand

Abstract

Developing countries used to be rather hostile to inward Foreign direct investment (FDI); they feared that FDI might lead to uneven global development. This attitude changed radically in the mid-1980s, particularly in Asia (Calvo, Laderman and Reinhart 1996; Markusen and Venables, 1997; Lall, 1998). Since then, host countries’ governments have welcomed increasing flows of inward FDI, essentially in the manufacturing sector. They now consider that FDI may be an ‘industrialization instrument’ less dangerous than international indebtedness (Rodriguez-Clare, 1996). The most visible characteristic of this change was the surge of FDI from developed countries in Asia until the Asian crisis broke out in the summer of 1997 (Hill and Athukorala, 1998).