Introduction

Summary

Since the mid-1980s, the economic strategies of Singapore, Malaysia and Thailand (or the ASEAN-3 in short) have shown a remarkable degree of convergence in one important respect: all three have adopted export-led, foreign investment-driven growth strategies. They rely chiefly on multinational corporations (MNCs) to develop export-oriented industries in the non-resource-based sector. Although Singapore is often grouped with the “little dragons” of East Asia — the newly-industrialized economies (NIEs) of Hong Kong, Taiwan and South Korea — it differs from the NIEs in that its export orientation does not depend on local entrepreneurs or local capital inputs but on MNC investments. In this respect, Singapore now has more in common with Malaysia and Thailand.

This convergence of economic strategies among the ASEAN-3 raises a number of interesting questions. The first is: what factors brought about this convergence? The answer is by no means clear, especially since the convergence was a recent phenomenon. Singapore was the first among the ASEAN-3 to welcome MNCs in large numbers in the early 1960s. This was at a time when the wisdom of such a strategy was often questioned. In fact, much of the literature on development economics at the time was distinctly anti-MNCs and full of foreboding about the dangers of dependency on MNCs and of neo-colonialist exploitation. While Singapore, with its tiny domestic market, adopted the strategy out of necessity, Malaysia and Thailand had larger domestic markets and initially took the more prevalent route of import-substituting industrialization. It was only in the mid-1980s that the latter made decisive policy shifts away from import substitution. This raises a further question: what part did the MNCs themselves play in bringing about these policy shifts? Put another way, did MNC investment patterns in Southeast Asia, and in particular the benefits they brought Singapore, influence the governments of Malaysia and Thailand to reshape their policies?

The reliance on MNCs also raises another set of questions. In the past, each country focused on activities that made best use of its natural resources.