The political economy of the ASEAN Free Trade Area : the dynamics of globalisation, developmental regionalism and domestic politics
This study examines how the interaction between globalisation and domestic politics shaped the evolution of the ASEAN Free Trade Area (AFTA) between 1991 and 2000. Previous studies have argued that AFTA, a project of open regionalism, was adopted to attract foreign direct (FDI) investment to the region. Accurate to a degree, this dissertation argues that the concern with FDI is only part of the AFTA story, albeit an important part. The FDI explanation is unable to explain why market access and national treatment privileges were offered to national (domestic) investors from the ASEAN countries at least ten years ahead of foreign (non-ASEAN) investors in AFTA's investment liberalisation programme. The dissertation explains this departure from open regionalism, which has yet to be accounted for in the literature, by advancing the notion of 'developmental' regionalism. Underwritten by strategic trade theory rather than neoclassical economics, developmental regionalism emphasises the nurturing of domestic capital by using the expanded regional market and temporary protection or privileges for domestic capital as the means to build up domestic firms capable of meeting global market competition. Unlike existing models of the globalisation-regionalism relationship, which do not integrate domestic politics or do so in a limited way, the model of developmental regionalism considers domestic capital to be a key analytical variable, and takes seriously its location within domestic politics and society. Using documentary research and elite interviews, and guided by these theoretical insights, the study shows that AFTA encompasses the features of both open and developmental regionalism due to the political significance of both foreign and domestic capital in the ASEAN economies. While both forms of regionalism were driven by the imperative of growth, distributive concerns were weaved into the concern with growth in developmental regionalism, as governments sought to nurture those segments of domestic capital that were important in sustaining elite rule.