Chapter 5: The rise of multinationals from emerging markets: East Asian experiences
The ‘Flying-Geese’ Theory of Multinational Corporations and Structural Transformation
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This chapter examines state_industry linkages in the course of the rise of multinational coreporations (MNCs) in emerging markets by drawing on East Asian experiences. Multinationals are both a creature and an instrument of industrial structure change that characterizes the process of economic development. In order for emerging markets to sustain catch up with industrialization they need their own homegrown multinationals so that they can exploit overseas business opportunities at each stage of structural change. In this regard, Japan set important precedents in transplanting low-wage production abroad via outward foreign direct investment (FDI) as a catalyst for industrial upgrading at home (comparative advantage recycling in low-wage production) and combining its resources-seeking FDI with economic cooperation in emerging host economies. The precedent of low-wage production transplantation was first followed by the newly industrializing economies and then has begun to be replicated by China. The precedent of FDI-cum-economic cooperation is currently most actively repeated by China in its efforts to secure overseas minerals and fuels.

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