The Southeast Asian countries that are covered in this study are all members of the Association of South East Asian Nations (ASEAN). This study not only analyzes Foreign Direct Investment (FDI) at the aggregate level, but also at the sectoral level, namely in the Information and Communication Technologies sector. It contributes to the study of FDI and regionalism (Regional Trade Agreements/RTAs), particularly in the case of ASEAN. Moreover, this study also contributes to the study of the ICT sector in ASEAN which is rarely found in the literature and places emphasis on the linkage of the ICT sector and other sectors in the economy. ASEAN is unique in several respects. Firstly, ASEAN has been evolving from basic economic, education and cultural cooperation into a Free Trade Area and later next year will become a common market (ASEAN Economic Community). Secondly, ASEAN consists of 10 countries which have large differences in their economic fundamentals and several other aspects. Foreign direct investment (FDI) has been discussed intensively for a long time. Several studies have summarized the existing theories and empirical evidences.
There are at least five reasons that explain why a study on FDI inflows to ASEAN is necessary, namely:
1. ASEAN has been becoming one of the attractive FDI host regions
2. The volatility of FDI inflows to ASEAN are relatively less volatile than 3 other RTAs, namely EU28, MERCOSUR and NAFTA
3. FDI is an important source of ASEAN’s capital stock
4. The evolution of economic integration in ASEAN from simple multilateral treaty into ASEAN Economic Community
5. The large differences in the economic fundamentals among ASEAN Member States
The first motivation of this study is the attractiveness of ASEAN. If we consider four RTAs (NAFTA, EU28, MERCOSUR, and ASEAN), ASEAN has been becoming one of the most attractive FDI host regions. This can be shown by the increasing share of FDI flows into ASEAN relative to global FDI inflows. In 2012, ASEAN still experienced a 2 percent increase in its FDI inflows even though most Asian countries experienced a setback in FDI inflows.
It is also reported that investors saw big prospects of the ASEAN economy as the process of economic integration was advancing to the next level. All the ASEAN Member States have signed an agreement to launch the ASEAN Economic Community in 2015. Moreover, the negotiation between ASEAN and its neighboring countries were getting more intensive). ASEAN has launched negotiations with Australia, China, India, Japan, New Zealand and the Republic of Korea under the scheme of a Regional Comprehensive Economic Partnership Agreement (RCEP).
SchlagworteASEAN Economic Integration Economics Export Platform FDI Foreign Direct Investment ICT Sector International Trade South East Asia Volkswirtschaft
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