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Fdi Effects Of Asean Integration

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  • Michael G. PLUMMER

    (School of Advanced International Studies, The Johns Hopkins University, SAIS-Bologna, Italy)

  • David CHEONG

    (School of Advanced International Studies, The Johns Hopkins University, SAIS-Bologna, Italy)

Abstract

For the past two decades, ASEAN Member States have pursued intra-regional market liberalization in order to provide more flexibility to multinationals and therefore promote the region as a competitive production platform. Attracting FDI has been a key objective of this regional project. This paper describes and analyzes recent trends in FDI to and among ASEAN countries, mainly comparing FDI patterns before and after the Asian Crisis, to characterize and assess the region?s strategies to liberalize and facilitate investment. We find that FDI flows to ASEAN countries suffered after the Asian Crisis but have picked up since 2005. Moreover, ASEAN FDI is dominated by Singapore. In addition, the sectoral distribution of FDI has changed in some members of ASEAN (i.e., Malaysia, Singapore, and Thailand) but not in others. We also perform an econometric analysis of the determinants of FDI to check for ASEAN-specific changes in FDI in the post-Crisis period. Our results, after controlling for a host of factors, indicate that ASEAN countries suffered a fall in total FDI but experienced an increase in intra-regional FDI after 1998. Moreover, we do not find any significant impact of FDI in China on ASEAN FDI.

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Bibliographic Info

Article provided by Region et Developpement, LEAD, Universite du Sud - Toulon Var in its journal Région et Développement.

Volume (Year): 29 (2009)
Issue (Month): ()
Pages: 49-67

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Handle: RePEc:tou:journl:v:29:y:2009:p:49-67

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Keywords: ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN); FOREIGN DIRECT INVESTMENT (FDI); ECONOMIC INTEGRATION; ASEAN INVESTMENT AREA; KNOWLEDGE CAPITAL MODEL;

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  1. Bruce A. Blonigen & Miao Wang, 2004. "Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies," NBER Working Papers 10378, National Bureau of Economic Research, Inc.
  2. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  3. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
  4. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
  5. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2006. "Financial Globalization," IMF Working Papers 06/189, International Monetary Fund.
  6. Kose, Ayhan & Prasad, Eswar & Rogoff, Kenneth & Wei, Shang-Jin, 2006. "Financial Globalization: A Reappraisal," CEPR Discussion Papers 5842, C.E.P.R. Discussion Papers.
  7. Chantasasawat, Busakorn & Fung, K. C. & Iizaka, Hitomi, 2005. "The Giant Sucking Sound: Is China Diverting Foreign Direct Investments from Other Asian Economies?," Santa Cruz Department of Economics, Working Paper Series qt26414163, Department of Economics, UC Santa Cruz.
  8. Chung H. Lee, 2004. "Economic Development in China and Its Implications for East Asia," Working Papers 200412, University of Hawaii at Manoa, Department of Economics.
  9. Badi H. Baltagi & Peter Egger & Michael Pfaffermayr, 2005. "Estimating Models of Complex FDI: Are There Third-Country Effects?," Center for Policy Research Working Papers 73, Center for Policy Research, Maxwell School, Syracuse University.
  10. Robert E. Lipsey, 2001. "Foreign Direct Investment and the Operations of Multinational Firms: Concepts, History, and Data," NBER Working Papers 8665, National Bureau of Economic Research, Inc.
  11. Michael G. Plummer & Chung H. Lee, 2004. "Economic Development in China and Its Implications for East Asia," Working Papers 200411, University of Hawaii at Manoa, Department of Economics.
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Cited by:
  1. Verico, Kiki, 2012. "The Impact of Intra Regional Trade Agreement on FDI Inflows in Southeast Asia: Case of Indonesia, Malaysia and Thailand," MPRA Paper 42087, University Library of Munich, Germany, revised 20 Oct 2012.
  2. James P. Gander & Steve Reynolds & Richard Fowles, 2010. "FDI Flow Volatility and ASEAN Members: An Exploratory Approach," Working Paper Series, Department of Economics, University of Utah 2010_01, University of Utah, Department of Economics.

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