Over the past decades, the majority of Asia-Pacific developing countries have focused on fostering their domestic business sectors as the engine of growth. They have typically followed export-led development strategies, while promoting foreign direct investment (FDI) inflows, mainly into the manufacturing sector. Combining supply-side capacity-building with utilizing natural resource endowments, low cost labour, stable demand and improved access to major export markets in the world, these strategies have accelerated the volume and value of export operations in the region. In addition, the region has become increasingly attractive to investors: capital inflows to Asia and the Pacific have rapidly increased since the late 1990s, mainly consisting of substantial inflows of FDI and, to a lesser extent, commercial loans, portfolio investment and official development assistance (ODA), which have fostered business sector development in the region. Overall, these factors have generally resulted in increased export competitiveness of Asian and Pacific developing countries, including those heavily hit by the Asian financial crisis during 1997 and 1998.

Related Subject(s): International Trade and Finance
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