The Evolution of the World Economy
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The Evolution of the World Economy

Terutomo Ozawa

The world economy is near a critical crossroads, as a rising China, the greatest-ever beneficiary of US-led capitalism, ironically dreams big to replace America's supremacy as a new hegemonic power with a non-liberal world order. This third volume of the trilogy on ‘flying-geese’ theory reformulation explains how capitalism has changed industrial structures across the world. Using structural development economics and political economy analytics the unfolding changes in the global industrial landscape are examined in depth. Will the ‘flying-geese’ formation survive the formation that has produced the East Asian miracle and is hoped to spread to Africa?
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Chapter 5: The rise of multinationals from emerging markets: East Asian experiences

Terutomo Ozawa


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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