In contrast, trade patterns within Asia are now much richer on the basis of the sophisticated vertical division of production processes. Countries are specializing in the optimal parts of the supply chain on the basis of their resource endowment and comparative advantage. This process is being propelled by foreign direct investment (FDI) coming from both within and outside the region.
For example, Japan exports intermediate and capital goods to China and other Asian countries, and these countries assemble what they import from Japan in order to make final products for the global markets. Consequently, the proportion of intra-regional trade in Asia has climbed to 54 percent, which lies between NAFTA's 46 percent and the EU's 62 percent.