Japanese Foreign Direct Investment and ASEAN Trade Development

Abstract

The ASEAN economy developed rapidly since the 1980s largely due to heavy inflows of foreign direct investment. With the introduction of an export-oriented industries (EOI) development strategy in the late 1960s, the region economy punches above its weight globally in terms of both exports and FDI inflows. The region has been a leading destination for multinational enterprises from all parts of the world for at least three decades. Japan was a main contributor of FDI in ASEAN. One of the reasons expansion of EOI industries and trade are due to the investment from Japanese MNCs. However the emergence of China as a economic power house has affected inflow of FDI. The world and Japan FDI have diverted from ASEAN to China. This had caused a drop of economic growth rate and dented expansion of manufacturing sector primely. This paper plan to explore FDI in ASEAN. Also to examine descriptively the role of Japanese direct investment in ASEAN and how does the investment associated to trade development.