ABSTRACT

With its combined consumer potential of 500 million inhabitants, Southeast Asia has been vigorously targeted by some of the world’s foremost consumer multinationals for years. The long history of colonization in the region, by Western powers in particular, has served to smooth the path for later economic expansion. Western MNCs are the oldest-established “modern” enterprises in Southeast Asia, beginning with colonial-era multinational trading companies and export plantations. Unlike in Japan or the so-called “tiger” economies of Korea, Hong Kong and Taiwan, where indigenous firms played the leading role, these foreign corporations have been instrumental in promoting the development of Southeast Asia. Even before the investment liberalization of the late 1980s and 90s, the Western MNC had come to occupy a major, if not dominant, role in the modern sectors of Southeast Asian economies. During the early decades, Western investment in the region was most attracted by the region’s abundant natural physical resources and cheap labor, and the possibilities they provided for competitive exports to world markets. But since the 1970s the presence of Western MNCs has steadily increased as these economies have grown and developed new sectors, and barriers to foreign trade and investment have been progressively reduced. This is typified by the series of studies indicating that at least half of domestic economic growth in Thailand since the 1980s has been the result of foreign direct investment (FDI), with foreign multinationals responsible for over one-third of the country’s subsequent export flows (e.g. Leinbach and Bowen, 2000).