These countries are also taking a growing share of industrial country exports, a factor that helped cushion the impact of successive recessions in industrial countries during 1990-93. These developments have been very positive, not only for Asia, but for the global economy as a whole. To begin with, there is an ongoing transformation in the composition of production and trade as the comparative advantage of many Asian economies continues to change. In particular, economies with relatively high wage costs are shifting toward higher value-added products, including services. The shift of labor-intensive manufacturing out of Hong Kong into mainland China and the associated boost to Hong Kong's economy from the growth of trade and financial services is perhaps the most dramatic example of this process.
Similar trends are also evident in the financial area.
Between 1990 and 1995, foreign direct investment in the region increased more than fourfold. Portfolio investment flows have also risen dramatically and, in the process, have helped deepen domestic capital markets in Asia. In fact, in some countries the relative size of the equity markets now matches that in many industrial countries. For example, in Hong Kong, Malaysia, and Singapore, stock market capitalization as a share of GDP, exceeds that of France, Germany, and Italy. At the same time, financial flows within the region have become more significant.