A Study On The Foreign Direct Investment In ASEAN-5

Since the middle of 1980s, FDI has been developed quickly in Southeast Asia. FDI not only brings advanced technology and management experience, offers staff training, provides the employment and raises the government revenue, but also promotes the exports and makes the structure of the industry well. But at the same time, FDI can also bring the negative effects on the economy of Southeast Asia countries. It may distort domestic market of capital receipting countries, squeeze local capital out of their own market and leading to the bubble economy of the host countries probably, etc. The finance crisis of Southeast Asia made the FDI that flowed to those countries reduced abruptly. Therefore, after the finance crisis of 1997, it is essential to rethink what role of FDI had played in Southeast Asia. Nevertheless, economic recovery of Southeast Asian countries in the post crisis has still depended on trade related foreign investment. Therefore, it's important to re-consider the role of foreign direct investment in the economic growth and development of the developing countries. This paper provides basic situation of the FDI in the main five countries of Southeast Asia, and analyses the features of FDI as well as the positive and negative impacts of FDI on economy of Southeast Asia countries. The paper has finally reached the conclusion that whatever in the pre or post period of 1997 Southeast Asian finance crisis, FDI was and will still be the engine of economy growth and development of the economy of Southeast Asian.