Since the mid-1980's, trade in intermediat goods and or semi-finished products dictated the major trade flows between Japand and other developing Asian countries and between the NICs and the ASEAN. Hence, intra-industry trade which dominated the trade flows among the OECD countries, has become the new pattern of international division of labor among the Pacific Basin countries.

The cost-driven FDI strategy, analyzed my John Dunning, from technological advanced countries had compartmentalized production process in accordance with technology hierarchies and dynamic comparative advantage in hosting nations. Hence, a well integrated global production network, which was facilitated by mobile capitals from MNCs and financial liberalization undertaken in the NICs, was emerging rapidly. For example, in consumer electronic industries, each of the major stages of production has different production characteristics; the design stage of consumer electronics usually involves research-intensive process whcih required hight quality of human capitals. The manufacturing stages, especially for keey componet such as TV screen tubes, is highly capital intensive. Hence, economies of scale production is necessary to maintain cost effective. Finally, in the assemble stage under which automation and standard technology are prevalent, the demand for labor is pre-dominated by low-skilled, cheap labor. Therefore, globalization of production network was fostered by the changing production techniques, and the pattern of new division of labor was primarily based on techological advancements among nations. (10)

It is insightful to not Ozawa (1992) illustration about the changing pattern of Japan's stages-based FDI during the four evolutionry phases of structural transformation as another case study for this essay ; When Japan's economy gradually shifted from light industries to tecnological-intensive, heavy industries in the 1960's during the second stage of structural transformation, Japan's MNCs started to invest in developing Asian countries, especially in the NICs, to exploit natural resources and to utilize lower cost labor in those hosting countries. During the 1960's, a great protion of Japan's FDI undertaken in the Asian NICs was aming at exploiting the comparative advantages of cheap labor in those host countires where abundant labor supplies were abailiable at the time as their economies were starting to take off. As a result, the development of labor-intensive industires in these host countries was accompanied by Japan's cost driven FDI stra

Some topics in this essay:
John Dunning, Pacific Basin, East Asia, Asian NICs, ASEAN China, TNCs MNCs, Japan's FDI, Graham Anzai, Intra-regional FDI, Japan's MNCs, pacific basin, division labor, trade flows, national boundaries, intra-industry trade, high-tech industries, asian countries, stages production, japan's fdi, developing countries, dynamic comparative advantage, segmentation production network, affiliates east asia, financial liberalization undertaken, growth intra-industry trade,