Abstract

Technology transfer from developed countries has been made possible by foreign direct investments (FDI). The East Asian miracle of industrial development with FDI has been led by the governments. The East Asian economies are currently moving from a product economy towards a knowledge-based economy in the post-industrialization period. It is now well established that knowledge created through innovation and technological progress is the long-term driver of economic growth for East Asia. Many East Asian governments have shown remarkable success in creating a knowledge-based economy by attracting a large amount of FDI. It appears that East Asian countries with ‘good governance’ tend to attract more FDI. FDI is contributing to the development of the a knowledge-based economy, just as it did during the industrialization period. This paper attempts to explain the impact of good governance in attracting FDI to promote a knowledge-based economy in East Asia. In doing so, this paper investigates the good governance indicators and their role in attracting FDI to promote a knowledge-based economy in East Asian countries.