Economic Crisis and Transformation in Southeast Asia: The Role of Multinational Companies

The collapse of the Thai baht in July 1997 marked the beginning of the Asian currency and financial crisis that evolved within months into a major economic crisis encompassing the entire region. This development drew into question the validity of the so-called economic success model of Southeast Asian countries. It also confronted multinational companies doing business in this region with a suddenly changed environment raising the question of what would be their short- and long-term strategic reactions. The companies’ responses are in particular important as these firms, their investments and technology transfer have been a major driving force behind the economic growth of Southeast Asia so far. Thus, our analysis aims at an understanding of the general behaviour and nature of MNCs in times of crisis while simultaneously assessing the character and extent of any remaining national differences that may impact on these firms’ behaviour in such times. From the point of view of developing countries, here Southeast Asia, analyses such as these are important in order to better forecast the effects of sudden growth declines on the investment and employment situation and hence on the general economic development.