India-ASEAN Investment Flows

The Association of South East Asian Nations (ASEAN) was created in 1967 through the Bangkok Declaration. It is a group of ten nations, viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. ASEAN has been quite successful in raising its collective bargaining power to ensure market accessibility with the major players such as USA, Japan and European Community (EC). ASEAN economies are among the most successful in terms of economic growth and development. Intra-regional direct investment flows have complemented and reinforced the growth of trade within Asia by building up the export capability of the host countries on one hand and by directly increasing machinery imports from the capital exporting countries on the other. The importance of increased intra-regional direct investment goes much beyond the increase in financial flows to the ASEAN region. Intra-regional FDI has been an important instrument for the realisation of the so-called "flying geese" pattern of industrial development in Asia. The ASEAN region has become one of the most attractive investment locations in the developing world and attracted a disproportionately large amount of FD!, particularly during1987-96 period. FD! is not only a source of capital funds and foreign exchange, but also is a dynamic and efficient vehicle to secure the much needed industrial technology, managerial expertise and marketing knowledge and networks to improve on growth, employment, productivity and export performance. The present paper deals with these aspects of FDI in ASEAN region.