Competitiveness of the ASEAN Countries

Competitiveness of the ASEAN Countries

Corporate and Regulatory Drivers

New Horizons in International Business series

Edited by Philippe Gugler and Julien Chaisse

In an age of increased necessity for competitiveness of nations and at a time when the world economy is facing recession, this book explores the possible trajectory of ASEAN – arguably one of the most dynamic areas in the world – as a regional economic and political bloc. The expert contributors address the industrial competitiveness of ASEAN and analyse the role of MNEs against the background of the challenges of integration. They illustrate that regional integration will only be a success if ASEAN’s linkages are broadened with global partners through negotiations of Free Trade Agreements. The book concludes that although much still remains to be done, and many promises are still to be unveiled, ASEAN’s ‘coming of age’ is an historic milestone.

Chapter 3: Multinationals and the International Competitiveness of ASEAN Firms

Nessara Sukpanich and Alan M. Rugman

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics

Extract

Nessara Sukpanich and Alan M. Rugman INTRODUCTION In the past, outward foreign direct investment (FDI) has been a phenomenon of developed countries. However, since the early 1990s, FDI from developing countries, especially from Asian countries, has grown rapidly (Banga 2007). In 2007, the outward FDI of developing countries accounted for 13 per cent of the world’s outward FDI, and Asia was the largest source of FDI from developing countries (UNCTAD 2008 database). There have been many studies on multinational enterprises (MNEs) from developed countries, but studies of MNEs from developing countries, especially from ASEAN member countries, are limited. While the main theories of MNEs can be applied to both MNEs from developed and developing countries, the patterns and underlying drivers and competitiveness of the two types of MNEs might be somewhat different. Accordingly, the main purposes of this chapter are to explore the patterns and trends of outward FDI from ASEAN member countries, and to explore the motives and competitiveness (based on the firm-specific advantages (FSAs)) of MNEs from the region. In particular, we examine the level of intra-regional investment among ASEAN member countries. In a series of studies, it has been found that large MNEs tend to exploit their FSAs within their home region of the triad (Rugman and Verbeke 2004). According to Rugman and Oh (2008), the studies for a specific country or region show a similar trend, for example, the study on European MNEs by Rugman and Collinson (2005); British MNEs by Yip et al. (2006); Chinese...

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