differentiation and a harsher international competition for market shares. In particular, a new and more sophisticated demand for computer and telecommunication apparatus induced remarkable improvements in microelectronics production. Furthermore, government policies fostered the process of technological development and pushed increasing efforts in basic research, like for software or new materials. Thanks to successful programmes for skilled workers formation and the provision of appropriate infrastructures for technological purpose, Singapore is becoming an important location for the research centres of electronics MNEs in the APR. Among the ASEAN4, Malaysia and Thailand seem to have offered better conditions for the relocation of the relatively more technology intensive productions. Their governments have adopted a liberal policy to attract FDI and have actively promoted the improvement of infrastructures and education, in order to meet the requirements of more technology-intensive production processes. As a consequence, Japanese companies were induced to transfer not only the assembly operations, but also some "technology-higher" phases of production, which require greater knowledge and involve increasing opportunities for the process of technology transfer. Moreover, such an improvement of the economic environment in the ASEAN4 countries did not imply an upgrading of local producers especially in terms of quality requirements. Therefore, according to the Japanese system of production, the transfer of the MNEs was necessarily followed by that of a large number of SMEs operating as subcontractors for part supplying.

3) Growth of Asian markets - The third factor which is contributing to the reinforcement of economic interdependence among Asian Pacific countries is the fast growth of their internal markets. One of the most impressive results of the economic development process experienced during the last decade by the NIEs and the ASEAN4 countries is the rapid growth of GDP per capita. This trend has implied an increase of the domestic demand for consumption goods and in particular of household electronics, which are given great privilege in the preference structure of Asian consumers. Moreover, the relocation trend of foreign MNEs has caused the demand for industrial goods to increase, especially in the case of electronic parts and components. The result was a new relocation trend, addressed to serve an APR internal demand no more confined inside each domestic market. This implied the new concept of investing, say to Malaysia, in order to produce for the wider “Asian market” of final and intermediate goods.

The third part (C) of table 3.4 shows the trend of production relocation from 1985 to 1990. If this period of six years is compared to the fifteen years of the second stage (1970-1984), it is immediate to note that as the total number of investments is almost the same (347 against 348), during the third stage Japanese electronics firms experienced a rapid growth of FDI $ ^{27} $ . The main characteristics of this massive relocation were: a) high concentration in the ASEAN4 countries, as the number of projects in ASEAN4 (112) were almost double than those towards the NIEs (65) and three times larger than those occurred during the second stage (41); b) growth of FDI in Mainland China (26 projects in “Other Asia”); c) increasing share of industrial equipment goods, which amounted to 21.3% of the total, against 15.8% of the second stage; d) still high share of electronic parts, which covered 66.7% of the Asian share and 58.3% of the total; e) relative growth of Europe, whose share on the total increased