3Foreign capital and open regionalism
How did globalisation influence the ASEAN member governments to embrace AFTA as a regional project? What specific dynamics associated with globalisation account for the particular manner in which AFTA unfolded during the decade? Were domestic political economic dynamics also involved in shaping regional responses to globalisation? These questions are addressed in this chapter and the next, which explain how domestic and therefore regional responses to globalisation were mediated by the political salience of both foreign-and domestic-owned capital in the ASEAN countries. This consequently led to two distinct types of regional projects within AFTA-open regionalism, to be discussed in this chapter, and developmental regionalism, which will be examined in Chapter 4. There is already a large literature that explains AFTA as a project of open regionalism aimed at countering the threat of FDI diversion away from the ASEAN economies amidst intense international competition for globally mobile investment capital. Accurate to a degree, this book demonstrates that the concern with FDI was only part of the AFTA story, albeit an important one.