Industrial restructuring in the region is a complex process
that involves the interplay of trade, investment and technology
transfer in an environment of changing comparative advantage
across countries and over time.
FDI can be an important facilitator in the process of
industrial restructuring. As manufactured goods produced in the
advanced countries mature and assume a more standardized
production process, it becomes less profitable for them to
produce those goods at home. Production is re-located abroad
and resources are thus released to produce new limes of
products, while recipient countries undertake the production of
standardized products. Hence, the process of foreign direct
investment has been one of the key element in enhancing
industrial restructuring and structural change. The attendant
globalization of production thus promotes the economic efficiency
of the international division of labor.
The emergence of the NIEs as important suppliers of FDI to
developing nations in the region is also an important
development. Many factor are behind this emerging trend,
including the need to recycle the large trade surpluses of some
of the NIEs as well as the changing pattern of these economies`
comparative advantage. Labor costs have increased significantly
in all of no longer profitable. The NIEs are therefore moving
into more sophisticated production lines, vacating those that have
become profitable for many others.
Korea has accumulated significant experience in technological
and human resource development and could assist other
developing economies, particularly the least developed and island
developing ones. Assistance would include the provision of
technical assistance programs for training and institution
building. In this respect, the vocational and technical training
programs of the Republic of Korea would have significant
relevance to other developing economies.
The ASEAN-4 economics are expected to continue to enjoy
relatively strong growth in the coming years, based on the
momentum they have built over the last few years. The
ASEAN-4 government, however, must not become complacent
about the need for structural changes in their industries.
Therefore, they must encourage local firms to absorb
technologies and upgrade technologically to attain higher
standards of quality and to differentiate their products in global
and regional markets.
Governments must sustain heavy investment in human
resource development, especially for industrial and technological
manpower, to meet the anticipated increase in demand for skilled
labor in coming years. Vocational and technical training to
improve industrial productivity and to absorb new technologies
remains a high priority for these economies.