agreements with those foreign firms (foreign direct investment FDI).

Inward FDI and TT are observed at introductory and import substitution phases, but at the export and mature phases outward FDI and TT occur and tend to accelerate the CPC development in late-starting countries. The latter are enabled only after sufficient managerial resources are accumulated. Outward FDI is further distinguished between the latter two stages. At the export phase FDI remains to be along the line of the extension of export marketing and aims to increase shares in export markets, thus export and FDI increasing in parallel. On the other hand at the mature phase, FDI relocates domestic production abroad to take advantage of cheaper inputs, thus substituting export.

FDI and TT accelerate import substitution in host, late-starting countries as were frequently observed in the East and Southeast Asian countries for the past three decades. Both enabled these countries to pursue rapid catching-up industrialization. Policies of investing and host countries either encourage or restrict FDI and TT, but they are often motivated by other policy objectives such as balance of payments or employment than deliberate control of the CPC development. (f.n.5)

Domestic production starts sometimes wholly with foreign entrepreneur and imported managerial resources, that is, the FDI of a 100 percent or majority equity share, which is consistent with product cycle (PC) model (Vernon, 1964). Trials and errors can be avoided and much of learning process is shortened in the PC model and they can even export from the beginning, that is a short cut of CPC. However, only minimum managerial resource is transferred to the host country and the industry will never be able to produce new products or new process of their own. Every new product or process has to be introduced from advanced countries, which hardly deserves the term of “transfer of new industry”.

The transfer of new products and new technology from advanced countries in one form or another is indispensable for the start of CPC in late-starting countries, but particular form of their transfer affects significantly the later performance of the CPC development. The form of technology transfer is determined by the entrepreneurship of local firms and bargaining between local and foreign firms. Many electronic appliance firms of Japan started as joint venture with American and European firms but became localized quickly in the 1920s Japan. (Yamazawa 1984, ch.7) Tran (1988) analyses the similar experience of Korean synthetic fiber producers in the 1970s. Chen (1988) extends the CPC model to promote the transmission of electronic industry among the Asian NIEs and ASEAN countries so that the industrial adjustment is coordinated in the region.

Here it will help to distinguish what the inverse V shape curves mean among the three versions of the CPC development. In Basic Type they depict growth curves of import, production and export. In Variation 1 they depict life cycle curves of individual industries in a country. In Variation 2 they depict life cycle curves of an industry in individual countries, which give the popular image of flying wild-geese led by Japan, followed by the Asian NIEs and then by ASEAN countries.

## CPC development in Asian countries

The industrial development of the Asian NIEs and ASEAN countries for the past three decades gives empirical supports to the CPC model, especially its Variation 2.