around 90% of the total investment in consumer goods was destined to serve the internal markets, while in the case of electronic parts this share decreased to less than 50%.

A peculiarity of the Japanese model of industrial transfer, emerged since the first stage, is the “market orientation” of the investment strategy which concurred to affect the production and trade performance of the foreign affiliates. According to this strategy, the pattern of investment maintained until the beginning of the third stage (1985) a “bipolar structure”. The relatively more labor-intensive production facilities in consumer goods were principally transferred to serve the needs of the internal markets for home appliances, while the relatively more capital and technology-intensive projects in electronic parts were almost entirely destined to the export markets.

## Second stage: 1970s and first half of 1980s

In the 1970s the situation dramatically changed from the side of the recipient countries as well as that of MNEs. On the one hand, the NIEs, followed by the ASEAN4 countries experienced a period of explosive growth based on the policy of export expansion which relied on the inflows of foreign investments in trade oriented projects, especially in the manufacturing sector. Various measures were generally adopted to attract FDI, like generous tax and fiscal incentives. On the other hand, these efforts coincided with the search of the Japanese MNEs for cheaper labor force in order to cut production costs at a time when inflation peaked on the wake of the two oil shocks and the international competition was strengthening due to the fight for market shares.

Referring to the period 1970-1984 (B), table 3.4 shows that Japanese companies established in Asian countries more than 60% of their total overseas production facilities, experiencing also a major growth of investments towards Mainland China $ ^{23} $ . Among the NIEs, not only Taiwan but also South Korea and Singapore received greater attention. In terms of sub-sectors, the leading position in Asia was taken by electronic parts (142), followed by consumer electronics (50) and finally by industrial equipment goods (25) $ ^{24} $ .

During these years, 18 new Japanese production facilities started to operate in Malaysia and were concentrated in microelectronics (semiconductors, integrated circuits and transistors). This transfer, in particular, followed those of American MNEs and was attracted by an inviting incentive policy of the local authorities aimed to the fast development of this sub-sector. Furthermore, around the early '80s, the transfer of high labor intensive production processes started to shift from the NIEs to the ASEAN4 countries, namely to Malaysia and Thailand, following a change in the structures of comparative advantages from the former countries, which gradually improved in infrastructures, higher value added and skill-intensive operations.

The bipolar strategy induced by the market orientation continued to be a characteristic of the investment pattern: on the one hand Japanese production of microelectronics established in Asia was mainly exported to the markets of USA and Europe, while on the other hand, assembly operations and partial manufacture of consumer goods were chiefly destined to serve local markets $ ^{25} $ . Moreover, the relatively higher technology-intensive production of industrial appliances still remained “inside” Japan: during these years the transfer in this sub-sector mainly occurred in the production of very simple telecommunica-