time, to reduce costs and to gain back price competitiveness. Therefore, they tried to diversify their domestic product, while investing to Southeast Asia and Central and South America for lower labor costs. Korea's investment was accelerated, in 1987, by the recipient governments which were suffering from current account deficits $ ^{3} $ . Foreign direct investment from Korea to Thailand was not an exception. (Table 17)

The increase in the foreign investment from Korea gives a great influence to Korea's export and import. It is reported that the export to the Korean affiliated manufacturers in foreign countries reached 1.7% of the total export amount and was increasing. On the other hand, the import from the affiliated manufacturers was also increasing. So far, Korea's import was dominated by natural resources. Since 1988, however, the import from the affiliated manufacturers has been increasing $ ^{4} $ . Such movements in manufacturing industries suggest that the same phenomenon as can be found in Japan is also occurring to a certain degree in the HEEI of Korea.

Flying-Wild-Geese development in the HEEI

The Flying-Wild-Geese development in the East Asian light industries was already mentioned in this volume. Then, can this economic development hypothesis be applied to the HEEI?

In a Flying-Wild-Geese pattern, an industrial development in one country starts from products import. During an import process, the country can accumulate foreign technology and start a domestic production. Later, the production substitutes import and finally export starts if competitiveness rises up to an enough level. This Flying-Wild-Geese development pattern needs two important factors for its successful development. One factor is a learning effect for manufacturers during the process of import, domestic production and import substitution. Another is an enhancement of industrial efficiency brought by a competition with foreign products in the process of export expansion $ ^{5} $ .

In the case of the HEEI development in developing countries, it takes much longer time for them to make each step of the Flying-Wild-Geese pattern (import→domestic production →import substitution→export ) without foreign direct investment by multinational enterprises and under the market protection policies of developing countries. And it might be that the countries can never reach an export stage.

On the other hand, if foreign direct investment of multinational enterprises and market protection policies in developing countries play an excessive role in the development process, a period to reach the stage of export expansion might be shortened drastically and the developing countries might not be able to gain from the learning effect in the early stages of the development and the industrial efficiency in the later stages. This is particularly true in recent years. The life cycle of electric and electronics products is getting so short that the host countries of investment are encountering difficulties in accumulating technologies and increasing competitiveness of their local enterprises.

In the case of the Korean HEEI, the process to import substitution was shortened in early stages by the government's market protection measures. And a local production deployed by direct investment of foreign enterprises, the Japanese ones in particular, drastically accelerated the process from the import substitution to export expansion stages. Table 18 indicates competitive indices of electronics parts for Japan and Korea. From this table, we can identify