Foreign direct investment in Southeast Asia: - Regional Office China

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Foreign direct investment in Southeast Asia: - Regional Office China

socialising public goods and private returns; and the role of theinterventionist state and incentives to the private sector.The discussion exposed the pressing need for the region to build on itssuccesses in attracting FDI by increasing the managerial skills of policymakers.The requirement for greater transparency in legal frameworks, soas to permit consistent interpretation across sovereign territory, wasemphasised as being a key determinant of success in investor aftercareservices provided by IPAs. Trade-policy linkages were underscored withrespect to strategies to attract efficiency-seeking FDI (i.e. export-orientedFDI). A persistent dilemma highlighted was balancing the interests of‘insiders’ wanting ‘protection’ from further competition, and the need forincreasing resource allocation efficiency by allowing greater competition.On the one hand, some countries in the region are reaping the benefits ofrapidly moving towards fourth generation investment policies, by reducingthe legislative differences between domestic and foreign companies andcreating IPAs for domestic industry. On the other hand, some countries aregrappling with the impact of the electoral cycle on the business cycle whichtended, in some cases, to thwart the transition of policy advice into law.Finally, the regional division of labour -- a function of differentiated stages ofdevelopment -- implies an intensification of regional co-operation at the levelof inter-ministerial co-ordination, in setting the stage for negotiating majorFDI projects into the region. This is despite the temptation (and dangers) ofa zero-sum competitive game. Such regional integration initiatives asASEAN+3, AFTA and AIA provide opportunities for such co-ordination.Second presentation summaryAxèle Giroud illustrated that the shift towards spatial distribution ofproduction, across countries and regions, poses new challenges for policymakersand IPAs. What are the characteristics of these spatially distributedproduction networks (SDPNs), and what are the implications for countries29

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