ABSTRACT
This chapter begins by reviewing aspects of a new theoretical literature on the clustering of economic activities that provides insight into regional developments. A clear implication of the increased mobility of goods and factors is greater economic integration and interdependence. The coefficient was unusually high before and just after World War II and even with its subsequent decline, East Asian interdependence remains somewhat more intense than Pacific-wide interdependence. The chapter examines the acceleration of the intraregional mobility of goods and capital. Simple econometric analysis is conducted on interactions between trade and investment. The acceleration of foreign direct investment (FDI) in the region is especially important, and several East Asian nations have joined the exclusive list of countries that are the world's major sources of FDI. Several countries conduct detailed surveys of the export and import behaviour of foreign-affiliated firms.
