Foreign direct investment in crisis and recovery: lessons from the 1997-1998 Asian crisis

Author: Athukorala, Prema-chandra

Source: Australian Economic History Review, Volume 43, Number 2, July 2003 , pp. 197-213(17)

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Abstract:

Is foreign direct investment more resilient at the onset of an economic crisis and the subsequent economic collapse in a host country compared to other forms of foreign capital inflows? Are affiliates of multinational enterprises in a crisis-hit country better equipped to withstand a crisis and aid the recovery process by readjusting their investment, production and sales strategies compared to local firms? This article examines these issues in the context of the 1997-1998 economic crisis in Thailand, Malaysia, Indonesia, Korea and the Philippines. The findings suggest that foreign direct investment was a relatively stable source of foreign capital in the crisis context and that the affiliates of multinational enterprises were instrumental in ameliorating the severity of economic collapse and facilitating the recovery process.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/1467-8446.t01-1-00051

Affiliations: 1: Australian National University

Publication date: 2003-07-01