tion apparatus $ ^{26} $ .

During this second stage, the export oriented investments in Asia had generally been made for taking advantage of the abundant supply of low cost labor force. The relocated productions tended to be unskilled or semi-skilled operations, resulting in relatively low opportunities for the technology to be transferred. Local governments, especially those of the ASEAN4 countries, provided generous incentive packages and adopted a very liberal investment policy, without imposing any particular requirement for local sourcing of parts. As a consequence, the Japanese MNEs involved in the export re-processing activities tended in most cases to import their requirements from Japan and the result was a weak backward linkage effect with the local manufacturers, which did not easily enter the production sphere of the multinationals.

## Third stage : second half of the 1980s to today

During the mid of the 1980s, several factors contributed to the starting of a new phase for the evolution of Japanese electronics industry in Asia. In 1984, the recession of the United States caused large repercussions throughout the Asian Region and many countries, included Japan, experienced in 1985 a fall in the output and exports of electronics. Although this recession proved to be caused by the cycle of the demand and the industry could quickly recover, the growing trend of industrial production and export were broken off and the new development pattern, which started since the second half of the decade, was based on a different international economic environment. Three main changes caused economic interdependence among the Asian Pacific countries to increase :

1) Yen appreciation - In September 1985, by the so-called “Plaza Accord”, a dramatic appreciation of the Yen against the Dollar and the main currencies of the advanced countries was decided: in broad terms, the Yen/Dollar rate halved in a few months from a level of 250 to a new rate of 125. This abrupt change forced Japanese companies to undertake a process of economic rationalization and affected two major conditions for international trade and investment: a) the exports from Japan to US and European markets became increasingly more expensive; b) the financial cost of establishing overseas production plants, especially in countries like the ASEAN4 whose currencies generally followed the dollar trend, was drastically reduced. Consequently, Japanese firms were induced to undertake a huge transfer process of their international production operations to the Asian Pacific countries, as they found much more convenient to serve the markets of the advanced countries by relocating their export-basis to the ASEAN4. Subsequently, the Yen appreciation was followed by a similar trend for the currencies of the NIEs, and the changes which affected the Japanese model of production transfer were partially extended to those countries as well. In particular, the NIEs began to relocate the more labor-intensive productions by means of massive FDI flows towards the ASEAN4, China and also other developing Asian countries like Vietnam and Cambodia.

2) Technological development - The second change is related to the relatively higher technological content of the transferred operations, due to the rapid process of technological innovation occurred in electronics. At the overall industrial level, greater emphasis was placed on product design and development, on response to a growing demand for product