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Foreign direct investment in crisis and recovery: lessons from the 1997-1998 Asian crisis

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  • Prema-chandra Athukorala

Abstract

Is foreign direct investment more resilient at the onset of an economic crisis and the subsequent economic collapse in a host country compared to other forms of foreign capital inflows? Are affiliates of multinational enterprises in a crisis-hit country better equipped to withstand a crisis and aid the recovery process by readjusting their investment, production and sales strategies compared to local firms? This article examines these issues in the context of the 1997-1998 economic crisis in Thailand, Malaysia, Indonesia, Korea and the Philippines. The findings suggest that foreign direct investment was a relatively stable source of foreign capital in the crisis context and that the affiliates of multinational enterprises were instrumental in ameliorating the severity of economic collapse and facilitating the recovery process. Copyright Blackwell Publishing Asia Pty Ltd and the Economic History Society of Australia and New Zealand 2003.

Suggested Citation

  • Prema-chandra Athukorala, 2003. "Foreign direct investment in crisis and recovery: lessons from the 1997-1998 Asian crisis," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 43(2), pages 197-213, July.
  • Handle: RePEc:bla:ozechr:v:43:y:2003:i:2:p:197-213
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    Cited by:

    1. Takagi, Shinji & Shi, Zongying, 2011. "Exchange rate movements and foreign direct investment (FDI): Japanese investment in Asia, 1987–2008," Japan and the World Economy, Elsevier, vol. 23(4), pages 265-272.
    2. repec:spr:eurase:v:7:y:2017:i:3:d:10.1007_s40822-017-0071-3 is not listed on IDEAS
    3. Kamel ABDELLAH ( GREThA, CNRS, UMR 5113 & ISG, UNIVERSITE DE TUNIS) & Dalila NICET-CHENAF (GREThA, CNRS, UMR 5113) & Eric ROUGIER (GREThA, CNRS, UMR 5113), 2012. "FDI and macroeconomic volatility: A close-up on the source countries," Cahiers du GREThA 2012-21, Groupe de Recherche en Economie Théorique et Appliquée.
    4. Masahiro Kawai & Shinji Takagi, 2010. "A Survey of the Literature on Managing Capital Inflows," Chapters,in: Managing Capital Flows, chapter 2 Edward Elgar Publishing.
    5. Shahid Hussain Javaid, 2009. "Dutch Disease Investigated: Empirical Evidence from Selected South-East Asian Economies," SBP Working Paper Series 31, State Bank of Pakistan, Research Department.

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