ABSTRACT
This chapter describes the economic growth effects that may result from Foreign direct investment (FDI) and its associated positive spillover effects. It discusses the short-term and medium-term policies which the individual Association of Southeast Asian Nations (ASEAN)-5 economies should pursue in order to optimise their growth performances. The chapter focuses on two issues. They are: the policies the ASEAN-5 economies should continue pursuing in order to promote their FDI related growth both in the short- and medium-run; and following the ASEAN-5’s experience, how the least developed countries should best utilise similar policies to draw and facilitate FDI inflows and stimulate their economic growths. The policy options for the medium-term are straight forward. It is evident that the best policy options for Malaysia, Singapore and Thailand are an extension of those for the short-run. Positive liberalisation of policy has been established by the empirical analysis as one of the most important determinant of FDI.
