Professor Kiyoshi Kojima's Contributions to FDI Theory: Trade, Growth, and Integration in East Asia

Professor Kojima of Hitotsubashi University is a leading Japanese economist. This article reviews and interprets two of his major ideas; a theory of pro-trade FDI and an extended “flying-geese” theory and explores their theoretical implications. Pro-trade FDI rests on the doctrine of comparative advantage, yet surprisingly Ricardo failed to apply the same logic to FDI flows. Production fragmentation that leads to intraindustry trade is governed by the doctrine. Kojima extends the evolutionary sequence of “importing-domestic production-exporting” to the next phase of “exporting-outward FDIimporting, ”hence a full circle from importing to importing. This structural transformation underlines East Asian industrial dynamism.