ISAS Insights

Many Asian companies have become significant foreign direct investors abroad. According to some rough estimates, intra-Asian FDI flows accounted for about 40 percent of Asia’s total FDI inflows in 2004. If correct, this share is broadly comparable to the extent of intra-Asian trade flows. However, unlike trade flows, there has been little to no detailed examination of FDI flows between Asian economies at a bilateral level. This paper uses bilateral FDI flows data to investigate the trends and drivers of intra-Asian FDI flows in the period 1997 to 2004-05 based on data from the United Nations Conference on Trade and Development (UNCTAD). For developing economies, the two most comprehensive databases on FDI inflows and outflows are the International Monetary Fund-Balance of Payment (IMF-BOP) Manual and UNCTAD. Neither source divides FDI into mergers and acquisitions versus Greenfield investments. UNCTAD by far has the most complete FDI database, and unlike the IMF-BOP data, it compiles data on bilateral FDI flows – both inflows and outflows.