partially explained by the intermediate nature of the electronics industry.

### 2.2 The Electronics Industry in the Asian Pacific Region: an Overview

By rapidly increasing its share on the total of manufacturing employment, output and trade, the electronics industry is assuming a central role for the economic development of the APR. In particular, it presents a high degree of intra-regional trade and a massive cross-country amount of FDI $ ^{7} $ , standing for one of the manufacturing sectors where the growth of the Asian economic interdependence is occurring at a faster pace.

Table 2.1 presents the evolution of electronics' share on manufacturing output and total GDP in the USA, Japan, South Korea and Taiwan. The remarkable figures registered by the Asian countries led by Japan and the forecast for further increase in the following decade, clearly show the importance of this industry for the APR economies. In particular by the year 2000, electronics industry in Japan, South Korea and Taiwan should exceed 20% of the total manufacturing output and reach 7% of GDP.

The growth of Japanese electronics industry from 1965 to 1988 is showed in table 2.2. Although the figures are affected by the inflationary trend, an overall dramatic increase may be clearly observed. Production gradually shifted from 2.4 billion Yen in 1965 to 14.6 billion Yen in 1975, then to 77.8 billion Yen in 1985 and finally to 165.3 billion Yen in 1988. During the period concerned, exports grew faster than production. Also imports grew faster than internal demand, though at a slower pace: while in 1965 only 25% of production was destined to export and 5% of demand was served by imports, in 1988 these ratios increased respectively to 43% and 9%.

In the remaining of this section, some principal aspects of electronics industry's development in the APR will be briefly analysed with regard to the characteristics of the country-groups (Japan, NIEs, ASEAN4) and to those of the three sub-sectors (consumer goods, industrial equipment, electronic parts).

## Japan

Japan is the centre of the Asian electronics technology and the pioneer of a catching-up process with the USA which started in home appliances, moved to microelectronics and finally reached computer and telecommunication industries. Although a proper “import-substitution” phase as depicted by the “CPC” theory was not experienced, since the 1950s, Japanese companies were able to catch up in technology with the American ones and eventually to gain the leadership in a widening range of electronic goods which required an increasing degree of sophistication. In other words, Japan gradually succeeded in replacing the USA on the technology frontier for many products $ ^{8} $ , in such a way that following the sub-sectorial classification of figure 2.1, it can be identified a process of “technological catching-up” pictured by the sequence of : consumer goods - electronic parts - industrial equipments.

The overall growth of total production and trade in Asian electronics shows the presence of another catching-up process: that one occurring between countries. In particular, due to the shift in the structures of comparative advantages, the NIEs are catching-up with Japan and the ASEAN4 with the NIEs. In this case, however, the process of technology transfer is assuming a shape which is different from the catching-up of Japan with the USA. In fact,