relocated their productions to NIEs and ASEAN countries. NIEs' MNEs were driven by the same motives to join in the similar FDIs in ASEAN later. ASEAN countries have received all FDIs in the area and achieved rapid industrialization through investment boom since 1987. Activated FDIs are accompanied by intensified trade flows in the region because the new ASEAN industries are supplied with parts, materials, and equipments by their parent MNEs.

The same interdependent mechanism is observed in the development of some sub-regional economic zones (SREZ) in East Asia; Growth Triangle, Baht Zone, South China Economic Zone, Yellow Sea Economic Zone, and Japan Sea Economic Zone. Their development are characterised firstly by “natural economic territory” in the neighbouring subregions belonging to different countries. Secondly there are identified in each SREZ a center and peripheries, the former development being transmitted to the latter through active investment, trade, and labour movement. Thirdly there are least formal commitment made by central governments of related countries, thus minimising the reliance on governmental supports. The interdependent growth within each SREZ is based on complementarity between divergent stage of economic development and resource endowments and quite consistent with the market mechanism.

They differ in their development stages and their development records are hard to be identified in national statistics of related countries. The last four SREZs were located along the border between market and socialist economic and their development as natural economic territories had been deterred by the political conflict but have been accelerated since the open market policies of China and the demise of the cold war. As individual SREZ expand, they are being overlapped so as to make a greater East Asia, which happens to coincide with the East Asian Economic Group (EAEG) proposed by the Malaysian prime minister.

We have highlighted the activities of the MNEs but never underestimate the role played by local enterprises and local governments. Local enterprises are recipients of industrial transfer. They are eager to acquire new technology in order to catch up with their counterpart MNEs. Which of MNEs and local enterprises become the main catalyst in industrial development depends upon industry and recipient country. For industries such as textiles and steel with matured technology, it is local enterprises which carry out the catch-up activities. However, in industries such as electronics and fine chemicals with ever-changing technology, the role of MNEs inevitably becomes larger. Further recipient countries endowed with entrepreneurship are capable of catching-up development led by local enterprises. On the other hand, when demand for new products is limited at domestic market, export orientation is necessary from the beginning. Thus dependence on MNEs becomes inevitable as they are familiar with overseas markets. In some cases both catalysts actively work together in industrial transfer.

Governments of recipient countries often provide favorable conditions for industrial development. Many governments in the East Asian economies are given credit for their guiding role. First they maintain cautious stance in managing macro economic policies so that they could avoid hyper inflation and economic instability, thereby encouraging firms and labour to contribute to industrial development. Second they adopted outward-looking policies and attracted FDIs and maintained competitive pressure from abroad necessary for