Foreign direct investment by Osaka's manufacturing firms has not boomeranged to hollow out the city's industrial base or stifled development opportunities in recipient countries. Osaka development officials assume transfer of capital and technology overseas should be connected to a strategy of industrial upgrading at home. Osaka's industrial strategies target the problems facing small and medium-sized producers and are couched within more encompassing national and regional development models. Developmental state institutions plus a dynamic and complementary regional division of labor enable Japanese cities to maintain a leading economic position in the Asia Pacific Rim while stimulating industrialization in the less developed Asian countries.
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