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 4: MNE Linkages in ASEAN

Axèle Giroud and Hafiz Mirza

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


Axèle Giroud and Hafiz Mirza INTRODUCTION Many countries in Southeast Asia have relied heavily on inward foreign direct investment (IFDI) and the activities of multinational enterprises (MNEs) for their economic development as stressed in Chapter 3 by Nessara Sukpanich and Alan Rugman. Thus, ASEAN (Association of Southeast Asian Nations) is a prime target for investigating the activities of MNEs and the impact these firms have on the economic development of host economies. In 2006, the value of FDI inflows reached US$52 379.5 million (ASEAN Secretariat). Over the past two decades, inward FDI stocks have increased rapidly, from US$64 303 million in 1990 to US$550 952 million in 2007 (UNCTAD 2008: 259). Similarly the share of inward FDI stocks as a percentage of gross domestic product (GDP) increased from 18.2 per cent in 1990 to 43.0 per cent in 2007, indicating the importance of FDI to the region’s economic development (UNCTAD 2008: 269). Singapore, Thailand, Malaysia, Indonesia and Vietnam are the recipients of the largest amounts of FDI amongst ASEAN countries, accounting for 90 per cent of all IFDI to the region in 2007. It is, however, the newest members that register the highest growth in FDI, namely Vietnam, Cambodia, Myanmar and Laos. The strong FDI performance for the region is attributable to favourable regional economic growth, an improved investment environment, higher intraregional investments, and strengthened regional integration (UNCTAD 2008: 48). MNEs affect their host countries’ development in a number of ways, directly through technology transfer (Hoekman...

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