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DOES FOREIGN DIRECT INVESTMENT NEGATIVELY AFFECT PRESERVATION
OF CULTURE IN THE GLOBAL SOUTH?
CASE STUDIES IN THAILAND AND CAMBODIA
By Antonia Owens Detwiler
An Independent Study Thesis
submitted to the Department of Global & International Studies
at The College of Wooster
March, 2024
in partial fulfillment of the requirements of I.S. Thesis
Advisor: Matthew Krain
Second Reader: Désirée Weber
i
Abstract
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect
the ability of countries in the Global South to preserve their culture? This research aims
to answer this question by employing a cross-sectional comparative case study analysis
utilizing methods of difference. Thailand and Cambodia are compared as they are in the
same region and have a similar culture. The metric of difference between Thailand and
Cambodia is their ability to preserve their culture. This ability is operationalized by their
respective attitudes towards FDI; Thailand imposes stringent regulations and limitations
on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer
limitations. The evidence from this study suggests that FDI from globally influential
countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the
ability of countries with lower GDPs (e.g. Cambodia) to protect their culture.
Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture
is amplified by the existence and implementation of restrictive FDI policies imposed by
their governments.
ii
Sintesi
È possibile che elementi della globalizzazione, come gli Investimenti Diretti Esteri (IDE),
hanno degli effetti negativi sull’abilità dei peasi in via di sviluppo di proteggere la loro
cultura? Questa ricerca intende rispondere a questa domanda attraverso due casi di studio
illustrativi comparate utilizzando metodi di differenza. I peasi paragonati sono la
Thailandia e la Cambogia, in quanto si trovano nella stessa regione e hanno una simile
cultura. Nonostante ciò, sono diversi nel loro approccio riguardo IDE. Infatti la
Thailandia ha molti legislazioni restrittive e limitative poste sugli IDE, mentre la
Cambogia non hesita di accetare la maggior parte dell’IDE che le viene offerto e impone
meno limitazioni. I risultati di questa ricerca suggeriscono che IDE da paesi con grande
influenza internazionale con un prodotto interno lordo (PIL) alto (e.g. China, U.S.) mette
in difficoltà l’abilità dei peasi con un PIL minore (e.g. Cambogia) di proteggere la loro
cultura. Inoltre, l’abilità, o la mancanzza d’abilità, dei paesi che ricevono IDE di
proteggere la loro cultura e’ amplificata dall’esistenza e l’implementazione di legislazioni
restrittive imposte su IDE dai loro governi.
iii
Dedication
To the communities around the world whose voices are unheard, whose cultures are
disappearing and whose lives are being affected by unregulated foreign direct investment.
iv
Acknowledgements
Foremost, I would like to acknowledge my appreciation for my mother Francesca and her
dedication towards helping me achieve my dreams. It is thanks to her unconditional love
and support that I was able to win a scholarship to The College of Wooster, and
consequently conduct this extensive research.
I would like to acknowledge my appreciation for my adviser Matthew Krain, who has
guided me through this research process with a positive attitude, dedication, and patience.
He has also been essential in helping transform my complex ideas into concrete
phenomena which can be measured, rendering my research more comprehensible to the
reader and my findings more meaningful.
I would also like to thank the Writing Center staff Nicki Benya and Gillian Lee. They
have been very helpful in rendering my writing more intelligible and in providing
feedback regarding the format of my research.
Moreover, I would like to thank my host family, professors, and friends in Bali, who have
taught me about their local traditions and mindset, and about the ways in which
globalization and foreign investments are changing their culture. It is thanks to their
openness in teaching me about their life, that I was inspired to research this topic.
Finally, I would like to thank The College of Wooster, for financially supporting my
education and for providing me with this amazing Independent Study opportunity, thanks
to which I have learned how to efficiently conduct research.
v
Table of Contents
Abstract............................................................................................ i
Sintesi ..............................................................................................ii
Dedication ......................................................................................iii
Acknowledgements ....................................................................... iv
Table of Contents........................................................................... v
List of Figures..............................................................................viii
List of Tables ................................................................................. ix
Introduction.................................................................................... 1
Literature Review .......................................................................... 4
Background History of Globalization ............................................................................. 6
Positive and Negative Effects of Contemporary Globalization ...................................... 7
Importance of Culture ................................................................................................... 10
Foreign Direct Investment............................................................................................. 13
Positives and Negatives of FDI..................................................................................... 14
Why These Perspectives are Under-Researched........................................................... 20
Hypothesis & Argument................................................................................................ 25
Methodology ................................................................................. 30
Why These Cases Make Good Comparisons................................................................ 31
Independent Variable .................................................................................................... 36
Dependent Variable....................................................................................................... 40
Qualitative Evidence.................................................................................................. 41
Quantitative Evidence................................................................................................ 44
Thailand........................................................................................ 49
History........................................................................................................................... 49
Economic Status and International Engagement........................................................... 50
Stance on FDI................................................................................................................ 50
The Foreign Business Act ............................................................................................. 52
Thai Culture................................................................................................................... 55
vi
Qualitative Findings...................................................................................................... 58
Migration................................................................................................................... 58
Maintenance of Traditional Livelihoods ................................................................... 58
Tourism...................................................................................................................... 60
Muay Thai Boxing ..................................................................................................... 61
Quantitative Findings.................................................................................................... 64
Language ................................................................................................................... 64
Collectivist vs. Individualist Attitudes ....................................................................... 66
Environment............................................................................................................... 68
Opinions..................................................................................................................... 70
Religion...................................................................................................................... 75
Cambodia...................................................................................... 78
History........................................................................................................................... 78
Economic Status and International Engagement........................................................... 80
Stance of FDI ................................................................................................................ 82
Cambodian Culture ....................................................................................................... 84
Qualitative Findings...................................................................................................... 85
FDI Causes Locals to Migrate .................................................................................. 88
FDI Causes Loss of Traditional Livelihoods............................................................. 95
FDI Leads to Mass Tourism...................................................................................... 99
Kun Khmer Boxing .................................................................................................. 102
Quantitative Findings.................................................................................................. 104
Language ................................................................................................................. 104
Collectivist vs. Individualist Attitudes ..................................................................... 107
Environment............................................................................................................. 109
Opinions................................................................................................................... 111
Religion.................................................................................................................... 116
Comparison ................................................................................ 118
Qualitative Evidence ................................................................................................... 118
Quantitative Evidence ................................................................................................. 120
Conclusion .................................................................................. 124
vii
References................................................................................... 135
viii
List of Figures
Figure 1 - Foreign Direct Investment Inflows as a Ratio to Gross Fixed Capital
Formation, 2022………………………………………………………………………….33
Figure 2 - FDI Regulatory Restrictiveness Index, 2019…………………………...……33
Figure 3 - Trade (% of GDP) – Cambodia, Thailand……………………………………35
Figure 4 - Foreign Direct Investment, Net Inflows (BoP, current US$) – Thailand, (in
billions)…………………………………………………………………………………..37
Figure 5 - Foreign Direct Investment, Net Inflows (% of GDP) – Thailand……………38
Figure 6 - Foreign Direct Investment, Net Inflows (BoP, current US$) – Cambodia, (in
billions)…………………………………………………………………………………..39
Figure 7 - Foreign Direct Investment, Net Inflows (% of GDP) – Cambodia…………..40
Figure 8 - FDI Regulatory Restrictiveness Index, by sector: Thailand vs, ASEAN vs.
OECD, 2019………………………………………………………………………….….51
Figure 9 - Amazing Muaythai Festival 2023 poster…………………………………….63
Figure 10 - Inauguration of the Muaythai Festival 2022………………………………..63
Figure 11 - Inauguration of the Muaythai Festival 2022 (fireworks)…………………...63
Figure 12 - Private Property Sign at Sihanoukville’s Independence Beach…………….90
Figure 13 - Cambodian shop Owner is Told to Move by Workers……………………...92
Figure 14 - Map of Land Concessions and Deforestation………………………………94
Figure 15 - Illegal Fishing Nets…………………………………………………………96
Figure 16 - Sand-Filling Site in Mangrove Forest………………………………………97
Figure 17 - Bayon Television Showing Kun Khmer Boxing…………………………..104
ix
List of Tables
Thailand
Table 1 - What language do you speak the most at Home?..............................................66
Table 2 - In a group, we should sacrifice our individual interest for the sake of the
group’s collective interest……………………………………………...…………….…..67
Table 3 - For the sake of the national community/society, the individual should be
prepared to sacrifice (wave2). For the sake of national interest, individual interest could
be sacrificed (wave, 3 and 4)…………………….…………………………………...….68
Table 4 - Which of these statements comes closer to your view?....................................69
Table 5 - If people have too many different ways of thinking, society will be chaotic....71
Table 6 - Our country should defend our way of life instead of becoming more and more
like other countries………………………………………………………………...…….72
Table 7 - We should protect our farmers and workers by limiting the import of foreign
goods………………………………………….……………………………………….....73
Table 8 - Foreign goods are hurting the local community………………………………74
Cambodia
Table 9 - Would you describe yourself as very religious?................................................75
Table 10 - What language do you speak the most at Home?...........................................105
Table 11 - In a group, we should sacrifice our individual interest for the sake of the
group’s collective interest……………………………………...……………………….107
Table 12 - For the sake of the national community/society, the individual should be
prepared to sacrifice (wave2). For the sake of national interest, individual interest could
be sacrificed (wave, 3 and 4)…………………………………………………………...108
Table 13 - Which of these statements comes closer to your view?.................................109
Table 14 - If people have too many different ways of thinking, society will be chaotic.112
Table 15 - Our country should defend our way of life instead of becoming more and
more like other countries………………………………………………………………..113
Table 16 - We should protect our farmers and workers by limiting the import of foreign
goods……………………………………………………………………………………114
Table 17 - Foreign goods are hurting the local community.……………………………116
Table 18 - Would you describe yourself as very religious?.............................................117
1
Introduction
With the rapid increase of globalization, more complex relationships are forming
amongst civilizations across the world. These relationships are characterized by the
exchange of wealth, goods, and ideologies between countries. These rapports are heavily
shaped by historical events, including colonization, and power dynamics. Most scholarly
research that has been conducted regarding globalization focuses on the positive effects
of this phenomenon and has been written and executed through Western, economic, and
scientific lenses. However, there is a lack of research regarding the negative effects of
globalization and Foreign Direct Investment (FDI) on communities in the Global South.
There is even less research regarding the potential negative effects of FDI on the ability
of countries in the Global South to protect their culture. This gap in research surprised me
as I have observed the negative effects that globalization and unrestricted FDI have on
the people of Bali, Indonesia.
During my immersive study abroad experience living with a local family in a
rural Balinese village, I discovered how the Balinese culture is changing as a result of
increasing FDI inflows, which are often directed to the construction of tourist
accomodations (like hotels, restaurants, shopping centers). The economy of the Balinese
Island has transitioned from depending on rice cultivation and commerce, which is a
tradition islanders have been practicing for centuries, to depending on accommodating
tourists. I believe this heavy dependence on the tourism sector is largely a legacy of
Dutch Colonization, but also results from the lack of government policies that limit the
2
amount of FDI inflow and that manage the ways in which foreigners can invest in
businesses in the island. This has caused the new generation of Balinese people to
abandon the ancient practice of rice cultivation to learn how to accommodate tourists by
learning English and Business, as well as by working in cafes, souvenir and clothing
shops, as motorcycle taxi drivers, and by opening their own restaurants. This shift in
focus has caused Balinese to leave their villages, migrate to the South, and pick up
tourism jobs because the salary in this field is higher as a result of the drastic currency
difference between the Indonesian Rupiah and other currencies including the USD and
the Euro. As a result, cultural customs are becoming less and less practiced. This
increases the probability of this culture’s disappearance. Moreover, the emphasis placed
on tourist accommodation has not only come at the cost of cultural preservation, but also
of environmental conservation and has increased Balinese dependence on other wealthy
countries who invest there.
Learning about the ways in which increased globalization and FDI in Bali have
affected the Balinese culture and people inspired me to question how advantageous
globalization really is, whether its benefits are reaped by some countries more than
others, and whether it has a positive or negative effect on the ability of countries in the
Global South to protect and preserve their culture. With the purpose of answering this
question I chose to examine FDI as a representative element of globalization. Because of
uneven global interdependence, the direction of FDI that I examined was that flowing
from wealthy powerful countries to less wealthy less powerful countries. This led me to
conduct a cross-sectional comparative case study analysis utilizing methods of difference.
3
The countries I chose as case studies are Thailand and Cambodia. These two countries are
similar in culture and level of international engagement, but differ in how restrictive they
are towards accepting and managing FDI. I hypothesize that FDI negatively affects the
ability of countries in the Global South to preserve their culture. Drawing upon my case
studies, I predict that Thailand, which has more restrictive FDI policies, will be able to
protect their culture more thoroughly than Cambodia, which has significantly less
restrictive FDI policies.
My first chapter reviews the existing literature regarding globalization and its
implications, the importance of culture, and FDI and its positive and negative effects on
communities in the Global South. I conclude by presenting my hypothesis. My second
chapter outlines the quantitative and qualitative methodology used to test my hypothesis.
In the following chapters I provide background information on Thailand and Cambodia
as well as examine the ways in which FDI is affecting their ability to preserve their
culture. I then compare my findings and conclude by explaining the results of my study,
which suggest that FDI does in fact significantly challenge countries’ ability to protect
their culture. I end the study with some reflections about the negative effects of FDI on
preservation of culture and offer some suggestions for future research about this subject
as well as about other elements of globalization.
4
Literature Review
In this section, the concepts expressed in the literature from which I base my hypothesis
will be described. Foremost, the history of human’s intrinsic need to progress and
exchange goods and ideas will be explained, alongside the major turning points in history
that have led to modern day globalization. To offer a wide range of perspectives on this
topic, the positive and negative attributes and effects of globalization will be described
and compared. Following this, definitions will be given to the concept of culture and its
importance will be addressed. Then foreign direct investment will be defined, and its
positive and negative effects will be articulated. An explanation of why these topics are
under-researched is included. Finally, my argument and hypothesis will be delineated.
First, it is necessary for me to provide an explanation for the usage of some terminology
in this study regarding the categorization of countries. For the purpose of this study I will
be utilizing the terms ‘global north’, ‘developed countries’, ‘industrialized countries’,
‘the West’ to indicate countries who possess a substantial amount of power and control
over other countries. By power I mean economic wealth, decision-making authority,
political and social influence. These countries are also ones who have a long history of
colonizing other societies and exploiting their resources for their own benefit (Khan, et
al., 2022). Some examples of countries in the ‘global north’ are the United States,
countries in the European Union (EU), and China. Typically, these countries (excluding
China) are seen as ‘The West’, however this is another term that often captures and
categorizes global power. Thus, for the purpose of this thesis, the terms ‘global north’,
5
‘developed countries’, ‘industrialized countries’, ‘the West’ will all be used to describe a
higher position of global power, largely in regard to economic resources available.
Conversely, the ‘global south’ represents countries who typically have lower
economic power and possess less influence on countries around the world. Countries of
the ‘global south’ are also referred to as ‘developing’. This does not mean that all
countries belonging to the category of less powerful reside in the south, and that all
powerful countries reside in the north, though this often is the case. The terms ‘global
south’ and ‘global north’ are mostly used to categorize countries based on their economic
and political power.
The terms ‘global south’ and ‘global north’ have been created with the purpose of
finding better alternatives to ‘first, second, and third world countries’ because this implies
a ranking order of value among countries. Though the terms mentioned above are a better
substitute for the terms that insinuate a ranking system, they are also controversial in
academia because ‘developing countries’ implies that these countries have not fully
developed yet. The problem is that scholars are defining development through a western
lens, and thus are setting the goal post for development based on their own value
standards. However, development can look differently for all cultures as they each have
their own values and ways of organizing society that they may consider advanced, but
may not be seen as such to the western world. Nevertheless, I need some kind of
terminology to explain uneven global interdependence and the differences of
opportunities and power between countries.
6
Background History of Globalization
According to Smithsonian Institute Research (2024), mobility, as well as the
exchange of goods, cultural artefacts, and ideas, has been a characteristic of human
existence since the beginning of our time. Initially, interactions and exchanges between
people occurred as a means of survival as people shared amongst each other the skills and
objects they acquired to live in certain environmental conditions. Gradually, this
necessity became a commodity as we no longer only exchange goods that are necessary
for survival, rather we also exchange goods to fulfill our gratifications and to allow
greater variability of consumer options.
Peter N. Stearns (2016) draws upon the works of many historians to argue that
1000 CE, 1500, and 1850s represent turning points in the history of globalization. The
period between 1000 and 1500 was characterized by interregional trade in the Afro-
Eurasian area, which was facilitated by the Indian Ocean and the ancient Silk Roads.
During this time there was a growing demand for trade of goods such as gold and spices.
Improvements in means of transportation played an important role in facilitating this
movement. The period following 1500 is characterized by an increased movement of
people and flow of goods. During this time, trade expanded to the Americas, the Pacific
and Australasia. Here, we see the first global exchanges of crops and domestic animals,
the emergence of the first global trading companies, the first global transmission of
diseases, and a global division of labor. These new forms of exchanges that spanned
across the globe changed the direction of history as distant civilizations now became
connected through the circulation of ideas, goods, and people.
7
It is important to understand how trade and communication amongst people
belonging to different communities and different parts of the world is an inherent
characteristic of the human species. Simultaneously, Stearns argues that these phenomena
have been amplified following the industrial revolution of the mid-eighteenth century.
This new era was characterized by the exchange of luxury goods/commodities enabled by
great improvements and inventions in communication modalities and transportation,
specifically of international steam ships and sea-bed telegraph cables. The twentieth
century marks the biggest transformation of international relations and trade as new
technologies and air travel arose (necessary for World Wars I and II). This allowed people
from parts of the world that hadn’t communicated or traded with one another, because of
physical distance, to do so. Inevitably, this has drastically changed the lives of most
communities around the world, for better or for worse (Stearns 2016). Trade and
communication continue to play an essential role in driving economies, politics and
cultures of the world.
Positive and Negative Effects of Contemporary Globalization
This brings us to the present day in which globalization can be defined by four
major shifts. These are the increased flow of goods and labor between countries, the
liberalization of financial markets, and intensified exchange of information through
technological advancements (Mills 2009). Globalization can also be defined as the
process through which national and regional economies, societies and cultures have
become integrated through the global network of trade, communication, immigration, and
transportation. This definition fails to take into account how these exchanges are
8
imbalanced. In fact, globalization is not quite the equal exchange of goods and
knowledge between countries, rather it comprises the spread of only a few ideologies, for
example capitalism, around the world. This means that one system, owning its own
values, goals, and ways of viewing life, is spread across the globe. Inevitably, this
signifies that this interconnectedness between countries is uneven and benefits some
more than others (Mills 2009). A theory called McDonaldization supports this claim as it
argues that cultural influence flows primarily from the United States to the rest of the
world (Clark, Terry, and Lynette).
There are many reasons why globalization is a positive force in the world and
why the capitalist way of living should be integrated in most countries. These reasons
include efficient trade of goods and services, the spread of technological advancements,
economic growth of a country, increased capital available for investment in productive
enterprises, more job opportunities, increased economic wellbeing of individuals
(decrease in quantity of people in poverty), and the potential improvement of the
education and health system (Goldin & Kenneth 2007). Others argue that there are moral
benefits to the spread of Western ideals because they could improve the wellbeing of
other communities. Examples of these values are democracy, equality between people
regardless of ethnicity, gender, religion, political orientation, human rights, and freedom
of speech (Seita 2017).
Nevertheless, globalization and the spread of capitalism also causes many
problems, such as economic inequality both within and between countries, exploitation of
people in lower GDP countries, growing instability of the global financial system, and
9
environmental abuse and degradation (Mills 2009). Mills also argues that globalization
has caused a process of homogenization and the emergence of a global culture, created at
the expense of national cultures. In this research I claim that globalization also increases
the probability that cultures become less practiced and leads to their extinction. In other
words, it is possible that the spread of only a few cultures, belonging to the most
economically and politically powerful countries is leading to the extinction of cultures of
less powerful countries.
It is also important to acknowledge the lack of research regarding the effects of
globalization on culture. More specifically, there is a literature gap regarding the effects
of the spread of only a few dominant ideologies from powerful countries to less powerful
countries. Most literature, media and research examine the positive effects of
globalization, of the spread of democracy and the capitalist system. The mainstream
media strongly believes in globalization being the answer to many contemporary issues,
including poverty and unemployment. Many scholars and international organizations,
like the World Bank, believe that ‘Western countries’ need to save other countries who
are struggling financially and who do not have the same means of organizing their
society. It is possible to observe an example of this in the World Banks’s “Why Wealthy
Countries Must Step Up Their Contribution to Fight Global Poverty” (2019).
In reality, these societies do not necessarily need to be saved as they are often
happy living their life in different ways, with different values and priorities. This does not
take away from the fact that cases of poverty, political unease, and social unrest should be
addressed and aided. However, these issues in ‘developing countries’ are often a result of
10
colonization and exploitation, which is somewhat connected to the spread of the
dominant ‘Western’ ideology (globalization). This claim is thoroughly explained by the
American-German sociologist and economic historian Andre Gunder Frank in his work
“The Development of Underdevelopment” (2004), in which he illustrates the world-
systems theory and the dependency theory. Frank's World-System Theory (2004) claims
that the world economy in not a collection of independent nations, rather it is a system in
which some nations dominate and other subordinate. This system is characterized by a
division of labor where the core nations, who dominate global trade and finance, exploit
the peripheral nations, who are the suppliers of raw materials and cheap labor. This
system perpetuates a cycle where peripheral nations rely on core nations for capital,
technology, and market access, hindering their independent economic development.
After reflecting upon this information, one could argue that the circumstances that
need help in ‘developing’ countries are often an effect of colonization. Therefore, more
research regarding the negative effects of globalization conducted with the intent of
understanding the other side of the story, which is not sufficiently covered by the
mainstream literature, is necessary. Knowledge is the first step towards making a positive
difference in the world.
Importance of Culture
According to Terry Eagleton (2016): “‘culture’ is an exceptionally complex word
– the second or third most complex word in the English language, so it has been claimed
– but four major sense of it stand out. It can mean (1) a body of artistic and intellectual
11
work; (2) a process of spiritual and intellectual development; (3) the values, customs,
beliefs and symbolic practices by which men and women live; or (4) a whole way of
life”. Culture is a broad concept that can be defined in many ways, but is often broadly
understood as a collection of beliefs, values and traditions that are transmitted across
generations (Tonja et al. 2021). Culture is also the lens through which different
civilizations view and understand life. Culture can also be understood as a product of
knowledge that has been acquired and passed on by the ancestors of a civilization as a
result of them adapting to the natural environment in which they were located (Eagleton,
2016).
There are many cultures in the world and their characteristics can vary drastically
or can share some elements in common. The difference between cultures usually depends
on the geographical distance of the people who possess these cultures (Hong and Cheon
2017). However, in the contemporary world globalization has facilitated the spread of
knowledge. Similarly to goods and capital, this spread of knowledge is not even amongst
countries. Western values are considered more valid and important than values and
traditions of other countries. This is a product of many years of colonization and world
domination from Western countries and world powers (Stearns 2016).
Some scholars, like Goldin and Kenneth (2007), argue that sentiments and
movements that defend gender equality, human rights, democracy, mental health, and
value of education, which are typically associated with western ideology, should be
spread across the world and that they could improve the lives of many. On the other hand,
12
having only one culture’s ideology spread and influence the way other, less globally
powerful cultures develop can lead to disadvantages as well. This can be seen very
prominently in the way the United States has utilized its position as a global superpower
to promote the values of its economic and social systems abroad. The western ideology
promoted by the United States is rooted in capitalism whose main purpose is the
accumulation of capital and maximization of profit (Cambridge Dictionary). Because the
objective of capitalism is the accumulation of wealth, certain morals must be ignored or
defied to achieve this goal. These values which often are sacrificed include human rights,
equality, a sense of community, respect of the environment, respect of elderly, a sense of
harmony with the universe, appreciation for what one has, and content with living a
minimalist life (Horkheimer 1974; Horkheimer and Adorno 1972; Marx 1873).
Despite the widespread belief in the West that Western knowledge is superior to
that of other cultures, it is limited. In fact, Hong and Cheon (2017) suggest that any given
culture’s views are limited to the truth of that civilization. Every civilization has a
different way of viewing the events that occur around them and a different way of
reacting to them. Learning about cultures different from one’s own can be beneficial
because it helps people understand and emphasize with others, it aids a person’s ability to
adapt to new and unknown circumstances, and helps the mind interpret information in a
multitude of ways. These attributes are acquired through learning about different cultures
and are very useful to widen one’s perspectives on life and cross-cultural communication
skills. Thus, the process of learning about cultures itself can provide people with a
broader set of intellectual tools necessary to envision and formulate solutions to
13
contemporary issues. The empathy that emerges from understanding the values of
different societies can reduce the potential for conflict, as culturally aware individuals are
often more open-minded and can address problems more efficiently. In addition to
promoting cross-cultural understanding, learning about a culture can be a tool for its
preservation, both internally and externally. Preservation of culture is important to more
than broadening perspectives or improving problem solving skills, as it makes the voices
of communities heard, which increases the likeliness of their needs being met (Hong and
Cheon 2017).
Foreign Direct Investment
As defined by Adam Hayes (2023), foreign direct investment (FDI) is an
ownership stake in a foreign company or project made by an investor, company, or
government from another country. In other words, foreign direct investment occurs when
a company or government invests in a business in a foreign country. According to the
International Monetary Fund (IMF), foreign direct investment exists when the investor
owns at least 10% of a foreign business (Amadeo 2022). This business arrangement is not
only characterized by capital investment, but also the ability of the investor to have a
certain degree of control over the business in which they invested. The investor can
influence the decision-making process and the management of the business, directly
depending on the investor’s ownership share. (Hayes 2023).
FDI can originate bidirectionally from countries in the global south to countries in
the global north and inversely from the global north to the global south. In this study I
14
will be focusing on the second scenario, which involves the flow of FDI from countries
with high levels of GDP to countries with low levels of GDP. The reason why I am
choosing to focus on this direction of FDI is because the global north tends to be more
powerful and thus can have more influence on cultures of less powerful countries through
financial investments. Cultures of less powerful countries are at risk of disappearing as
more dominant cultures are.
One reason for this is that countries in of the global south are financially
vulnerable and this renders it harder for them to reject FDI proposals. These countries
often accept FDI because they are desperate for their economic conditions to improve,
something which is often promised by foreign investors. Moreover, my decision to focus
on FDI flows into global south is also statistically supported by the fact that this direction
of FDI is the most common. In fact, the United Nations Conference on Trade and
Development stated that in 2020 developing countries received over half of the total
global FDI, with most of those investments going to less-developed countries in Asia and
Oceania. FDI can significantly benefit developing countries, however it also bring costs
that local governments may not be aware of.
Positives and Negatives of FDI
There are many reasons why FDI is seen as a positive phenomenon and why it is
supported by organizations such as the United Nations (UN). FDI is seen as a powerful
tool to help ‘developing countries’ grow economically by proving access to instruments
and resources. This increased access to resources can increase employment rates in that
15
country. FDI can help a foreign country gain access to instruments and resources that
enable the employment of more people of this country and improve the conditions of
these work environments. Some elements that aid a country from an economic point of
view include the investment into the construction of infrastructure (e.g., business
buildings, schools, hospitals, etc.), the transportation system, power generation and
distribution, provision of water and sanitation, and technological development (UNCTAD
2023). Regarding this last point, FDI investors can incorporate the latest technologies,
operational practices, and financing tools into their foreign business. This can increase
the efficiency of the business and reduce the influence of local governments have over
them (Amadeo 2022). FDI can also help the people of a less economically developed
country to build skills useful for their work performance in the business of interest. These
skills can provide long-term help to the country because they can be applied to other jobs
in the future, increasing the probability that the country will grow economically. Many
economists and globalization supporters like to demonstrate through graphs how these
forms of aid increase economic growth, which is assumed to be related to better living
standards, in the country in which funds are inflowing. Empirical studies, like the types I
just mentioned, finding a positive effect of FDI on growth include De Gregorio (1992),
Zhang (2001), and Baldwin et al. (2005). The first two scholars examine positive
spillover effects of FDI in the following countries, Latin America and China, respectively.
FDI is also seen as a positive means through which a nation can grow
economically and maintain social and political harmony. A specific case that come to
mind is that of Malta. The Government of Malta introduced the legal notice 335 of 2017
16
(updated in 2020), denominated at The Grant of Citizenship for Exceptional Services
Regulations, that creates routes to Maltese citizenship by virtue of exceptional services to
the Republic of Malta (Mifsud 2022). This law allows the Minister to grant a certificate
of naturalization as a citizen of Malta to an alien or stateless person if they provide some
kind of humanitarian service which positively contributes to the well-being of Malta and
its people. This service can come in many forms, some of which are: contributions by
scientists, researchers, athletes, artists, cultural performers, investors, and entrepreneurs.
To earn Maltese citizenship, a person must make a minimum investment in between
€600,000 - €750,000 in addition to holding residency status in Malta for about 12-36
months. An alternative option to gain Maltese Citizenship is to donate a minimum of
€10,000 to a registered philanthropic, cultural, sport, scientific, animal welfare, or artistic
NGO or society. This is in addition to demonstrating connecting factors with Malta
through personal, social, commercial, investment and philanthropic engagement with the
host country Malta (Dr. Priscilla Mifsud 2022). This means that the Maltese Government
is willing to give citizenship to people who were not born in the country nor have lived
there for very long if the person makes a non-refundable large direct investment in the
country or makes a substantial contribution to the Maltese society and culture.
This is one of the cases in which FDI does not negatively impact culture, rather it
might enhance the local culture and maybe even improve it. This is enabled by the
Maltese government who encourages talented and wealthy foreigners to invest in the
country both financially and intellectually. The expected outcome of these investments is
the economic, social, political, intellectual, and cultural growth of Malta. Though this
17
may be true, it is important to remember that Malta’s culture today shares more values
with ‘the West’, such as economic growth, scientific progress, technological
development, diversity. Whereas a culture that varies drastically from this one and those
of European countries may not benefit from FDI, specifically in regards to protection of
culture, because their values may be drastically different. For instance, a culture that
emphasizes worship of their local ancestors, like the Balinese culture, will probably not
benefit from handing out citizenship to foreigner investors who neither understand nor
follow ancestor worship because these foreigners would not practice their culture, hence
contributing to its disappearance.
Another positive attribute of FDI that economist scholars emphasize is that it
increases GDP levels; examples of these scholars are De Gregorio (1992), Zhang (2001),
and Baldwin et al. (2005). A problem with this statement is that GDP is assumed to be a
good measure of living standards for all countries across the globe. This is partially
accurate as more money in a country typically and ideally corresponds with the country
having more essential needs such as water, food, shelter, healthcare, education,
employment (Mills 2009). However, this theory does not consider wealth distribution and
concentration which is necessary to observe whether the resources mentioned above are
equally accessible to all social groups regardless of class (Mills 2009).
In examining the concept of Gross Domestic Product (GDP), it becomes evident
that this widely used economic metric primarily focuses on measuring the economic
wealth of a community or country. However, historical evolution reveals that GDP
emerged as a response to the need for a universal measure of wealth during times of
18
economic turbulence, such as the Great Depression and World War II (Mills 2009). This
historical context provides insights into the limitations of GDP as it fails to consider the
complex factors that contribute to overall well-being and quality of life, both on an
individual and societal level, nor does it account for non-economic factors. Furthermore,
GDP doesn't account for systemic inequality, and its correlation with individual happiness
and access to essential resources is often tenuous. This critique underscores that GDP's
economic lens doesn't fully capture the diverse and intricate elements of human
existence.
On a global scale, the one-size-fits-all approach of GDP seems tailored to the
economic system and lifestyle of the United States. However, this alignment with
Western consumer culture has led to the assimilation of foreign customs and the erosion
of indigenous customs and values in other parts of the world. The result is a
homogenization of culture that disregards the unique perspectives and values of various
societies. This cultural erosion also obscures the importance of nature and its
preservation, as highlighted by experts like Partha Dasgupta. Dasgupta's critique of GDP
underscores that nature is invaluable and irreplaceable and attempts to assign monetary
value to it are fundamentally flawed. As a result, there's a growing consensus that GDP is
an unsustainable measure of living standards, and a shift towards alternative metrics is
necessary, ones that account for the multifaceted nature of human existence and consider
environmental sustainability as a vital component of true well-being.
Additionally, GDP does not fully capture the complexity of humans’ existence and
how our happiness depends on a multitude of elaborate phenomena, including social
19
relations, generational traditions of how to live life, culture, environmental preservation,
and respect. In fact, in a study conducted by Diener and Tay (2013), GDP predicts life
evaluations of people within a nation but does not account for the feelings people have
regarding their personal income growth or decrement. A practical example of this can be
found in three countries with high recent growth rates in GDP – China and Chile. “GDP
per capita income has doubled in the last ten years and 18 years for China and Chile,
respectively. Nevertheless, both nations report declining levels of life satisfaction”
(Easterlin et al., 2010). This statement implies that GDP measures do not directly
correlate with how happy people are.
An alternative measure of happiness has been found by Thin, Neil, Ritu Verma,
and Yukiko Uchida (2017) who argue that culture positively influences level of happiness
and development. These authors define culture as a learning, knowledge and
communication processes by which people collectively generate values, meanings, and
identities. They analyze how culture is an essential factor in determining people’s levels
of life satisfaction. They support this claim by explaining how culture is associated with
people’s most treasured achievements, collective sense of belonging and sources of
meaning. Moreover, they elaborate on the fact that though culture in itself is neither
‘good’ nor ‘bad’, there are elements of culture can be considered as such. There is an
intrinsic value in the enjoyment of cultural practices and cultural sense of belonging.
An example of an element which represents culture in this study is that of
language. Language is associated with identity, history and belonging by facilitating
communication and connectedness, which consequently effects happiness. Non-linguistic
20
forms of communication, such as body language, music, dance, and the embodiment of
knowledge, are also significant in articulating culture and wellbeing. In conclusion, these
authors argue that conceptions and valuations of happiness and the individual self are
strongly influenced by culture (Thin, Neil, Ritu Verma, and Yukiko Uchida 2017).
Why These Perspectives are Under-Researched
Research concerning the effects of globalization on communities in the Global
South has been centered on the positive effects it can have, often not accounting for the
potential negative impacts alongside this. Even less has been researched and covered
about the negative effects of FDI on the preservation of culture in countries of the global
south. Because of the lack of research about this side of the story, there was minimal
evidence to inform the preliminary assumptions of my research. Nevertheless, I believe
that describing the perspectives in this study is necessary to ensure that more voices of
exploited or marginalized communities are being heard.
In order to increase the credibility of my study and its theoretical approach, I
consider it necessary to discuss the motives behind why some information being used to
support my argument is not well-documented. There is a lack of research about the
negative effects of globalization, specifically FDI, on the preservation of culture. One
reason regards the maintenance of the current global power structure. Powerful countries,
which include the US, countries in the EU, and China, want to maintain their power
status by perpetuating the expansion of the dominant narrative. The dominant narrative is
presented as the best system through which societies should live, and capitalism is one of
21
the current dominant systems. This dominant systems of living and modes of thinking are
an incredible example of human’s potential to create and progress. It possesses some
positive characteristics and shouldn’t be shunned and obliterated. Rather it has the
capability of creating great positive change in the world. At the same time, it is not the
only system through which societies can and should live. Hence, it is important that other
systems of living should also not be shunned or obliterated, as they also have traits that
could be beneficial for the rest of the world to learn. Regardless of the negative attributes
of other cultures, similarly to the capitalist system, every cultural system has positive
qualities that other societies can learn from.
To understand why the dominant ideologies and systems hinder other culture’s
ideologies from being heard, which contributes to a lack of sources in my study, it is
helpful to understand the root motivations of capitalism. According to the Cambridge
Academic Content Dictionary, capitalism is an economic, political, and social system that
is based on property, business, and industry being privately owned, and its central
purpose is maximization of profit. Many structures through which the people in the U.S.
live by have been created with this goal in mind.
The authors Theodor W. Adorno and Max Horkheimer (1972) in their book
Dialectic of Enlightenment discuss how for capitalism to work, things have been
instrumentalized with the purpose of using them to make profit. In order to maximize
profit, capitalism is based on a hierarchy of value of goods in which instrumentalized
commodities must have a certain value. Under this framework, commodities can include
goods and services, thereby making people’s time part of the value-hierarchy through the
22
production of these goods or value of their service. Since the purpose of capitalism is
maximization of capital, people take actions to achieve this goal even if it comes at the
expense of exploiting nature and other people whose skills and contributions are
considered less valuable in the hierarchy. A byproduct of ‘the West’ quantifying the value
of all things in a ranking order, is that some human beings or modes of living are not
considered valuable. A principal example of something that capitalism does not consider
to be inherently valuable is the preservation of nature, as it does not contribute towards
creating profit unless its resources are extracted. Of course nature has many valuable
resources that fuel capitalism, but the conservation and respect of nature, which could
consist in limiting how much we exploit it, is not profitable in the short run, hence
protecting it is not a priority. Similarly, capitalism allows for the exploitation and abuse
of people as commodities, as protecting the conditions that allow them to survive and
strive is not profitable in the short run. Therefore, capitalist systems do not prioritize the
protection against exploitation so long as it results in maximized profit margins
(Horkheimer and Adorno 1972).
Capitalism is the most highly esteemed system in ‘the West’ and, because ‘the
West’ is one of the most dominant and powerful forces that drive globalization, cultures
that do not believe in the capitalist way of thinking are, at times, considered inferior.
Though this thought is not always explicitly expressed by scholars in ‘the West’, it is
often implied in their work, especially during the 19th
and 20th
centuries, in which the
term ‘barbaric’ was used to describe a person or civilization that was considered
‘uncivilized’ (Lepeniez 2008).
23
Nevertheless, the motivation for the cultivation of knowledge is the same across
the globe and amongst all cultural communities. This motivation is to understand our
surroundings, interpret our existence and the origin of life, and create a system through
which people can live their life with a sense of meaning. However, the methods of
arranging society and understanding reality are different amongst societies based on the
values they reflect, hence their cultures are different. Capitalist systems value the
accumulation of capital and resources, which can easily be imposed across cultures
regardless of their values as many already have economic systems that concern capital.
This ability to be applied to a wide variety of cultures also leads to western thought being
more valuable on a global scale as it promotes engagement in a capitalist global
economic system. However, other cultures, for instance the Balinese culture, do not put
the same emphasis on accumulation of wealth as the capitalist culture does. Therefore,
cultures have their own understanding of what development is; it could be that a society
aims to develops spiritually or to become more aware and interconnected with nature. As
a result of this difference amongst cultures in defining development, knowledge from
other cultures is considered not as valuable, hence there are limited efforts to preserve
this cultural knowledge and to translate it into the dominant languages (e.g. English)
(Robinson 2014). Consequently, these limited efforts for preservation of knowledge lead
to a lack of engagement with these perspective in academic literature.
Another factor that contributes to the lack of information about other non-western
cultures is that these cultures often pass on knowledge orally through generations.
Therefore, lack of written information and lack of translation of this information in the
24
dominant languages contributes to there being a lack of research regarding the interests of
people belonging to these cultures and regarding their life perspectives. Moreover, if
scholars from other countries do not have an education that is considered to meet the
same standards of rigor as ‘the West’, then the knowledge they produce is not considered
reputable and reliable. This lack of reliability is also a result of these non-western cultures
often lacking an empirical dimension to organizing their knowledge. Additionally, if this
information is not cited, produced, or translated in the very precise and constricting
structure that ‘the West’ has created and considers reputable, then this information is
unprofessional and unreliable in the western cannon.
Another reason why there is a lack of research regarding the effects of FDI on
culture is because culture is hard to define and measure. Culture is an agglomeration of
attitudes, values, traditions, and actions which vary drastically among civilizations in the
world. For this reason, it is hard to quantitatively measure and analyze from a scientific
and economic lens. An argument made in a research that does not possess quantitative
measures, is considered less trustworthy and reliable. Hence, it is easy to follow the
mainstream tendencies of only studying things that can be measured through economic
and scientific lenses with the hope of avoiding looking unprofessional. People are often
driven by the fear of being ostracized from their community, and scientists or scholars
who do not engage in the western standards of researchers must consider their reputation
in academia when using “unreputable” sources (Noelle-Neumann 1993).
All these facts contribute to lack of knowledge that the world has about less-
powerful countries in the ‘global south’ and these western systems of living and
25
controlling other countries are designed and continue to allow some information to be
considered more important and reliable than other information and cultural knowledge.
This perpetuates uneven global exchange and dependence (good) and allows ‘the West’ to
continue to prevail over other countries by taking advantage of them and being indifferent
about the extinction of their cultures.
It is for these reasons that I consider it very important to understand how cultures
are being suppressed, changed and brought to extinction. By understanding what leads to
cultures being less practiced, we can try to deconstruct the narratives we have been taking
for granted and create a more fair world in which not only one culture is protected and
spread, but in which each civilization can practice their own culture in peace without
exploitation (and maybe even spread their knowledge to the world with the hope of
creating a more equitable world and creating solutions to contemporary issues, such as
learning to respect the earth and our connection to it).
Hypothesis & Argument
In this research I plan to fill the gap in the literary field about the negative effects
of FDI on culture. Specifically, I hypothesize that FDI negatively affects the preservation
of culture in countries in the Global South. Specifically, I support the claim that FDI
renders it harder for people in the community in which the investment is being made to
practice their culture. This can eventually lead to the extinction of the cultures belonging
to countries who accept high levels of FDI. Consequently, I also support the claim that
26
countries who implement policies to limit FDI will have a greater ability to protect their
culture.
There are various theories that I envision and that I expect will support my
hypotheses. I expect to validate these claims through the usage of literature, which is
mentioned in the sections above, in addition to new sources relevant to these concepts.
One claim I hope to support is that the more foreign investors own of a business in a
country, the less power the locals will have to control the decision-making process
regarding the ways the business is structured and conducted. A business investor’s
decision-making power depends on how big of a percentage they own of the company
because funds play an essential role in who can decide where the funds are distributed.
Another theory from which I derive my hypothesis is that Foreign investment in
the business of a country can lead to unfair competition between funded business and
other businesses which are not funded by foreigners. I suppose that this might lead local
business to go bankrupt and consequently stop producing their local traditional goods.
This is a problem for culture because goods are a direct representation of culture as they
are the physical portrayal of cultural skills, knowledge, and practices that have been
passed on through generations.
Moreover, young locals in the country in which FDI flows might learn the
language of the foreign investors with the hope that their probability of getting employed
by them is higher. Because of limited time, resources, and mental energy, learning the
foreign language may come at the cost of not learning the local language or the specific
27
language of that person’s tribe. This would lead to the local languages and dialects to be
less practiced, which eventually leads to language extinction. This is important because
language is one of the most direct representations of culture.
Related to this latest idea, I expect to support the theory that foreign investors
bring along to the area in which they are investing their own values and ideologies
belonging to their culture of origin. This influences the local culture. An example of this
could be observed through the instillation of individualistic values by the foreign investor
into the locals who are employed in the business which if being funded. For instance,
local employees may be encouraged to excel in their work performance even at the cost
of negatively affecting their other co-workers. In a country that believes in collectivistic
values, this local employee may be contradicting their local culture because they want to
maintain their job status at the business which is being funded by the foreign investor.
Another example of cultural influence could be that the foreign investor may require
work days to be Monday through Friday, without taking into account the local culture
which might believe in not working on certain days to dedicate them to prayer, cultural
celebration or ceremony, cultural holiday. This could lead to less participation in
traditional events which could lead this culture being less practiced.
Furthermore, I will provide evidence to support the claim that FDI from wealthy
western countries to developing ones leads to environmental degradation. My reasoning
for this is that foreign investors from countries, like the US and China, will bring over
ideologies and business strategies that are based on profit maximization rather than
respect for the land. Though there are some exceptions to this, I expect to find a
28
correlation (or causal relationship?) between FDI and less strict ethics and policies that
protect the environment. This might be the case because the culture in which the
foreigner is investing adapts to the requests of the investor which are focused around
profit maximization. Because many cultures, like the Buddhist ones, are based on respect
for nature, harm to the environment also means harm to the practice of these cultures.
In regards to my second hypothesis, I support the claim that countries who
implement policies to limit FDI will have a greater ability to protect their culture. The
reason for this is governments who take measures to set limitations on the sectors in
which foreigners can invest, how much they can invest, and in what circumstances will
have more control over the businesses in their country. Having control over the
businesses of a country is important because these are central to the economy and cause a
serious of chain-reactions that are not only in the work environment of a country. The
way in which businesses are conducted and the systems they have in place are important
because they determine who may get employed, salaries, and working conditions. Also,
the availability of certain jobs changes the intentions of locals in regards to what skills
they may aim to acquire and what academic paths they should follow. Hence, in a way,
the types of jobs available shape the intentions and actions of the nation. Moreover, the
ways in which businesses are conducted affect not only the people employed, but also
their families and the environment. Systems that consider the broad picture of how they
are affecting a society and that take into account the wellbeing of its people and
environment, will likely have more positive effects and be sensitive to the preservation of
culture. This could mean that businesses in which locals have most of the decision-
29
making power, will execute their business in a way that is respectful to the locals and
their culture. Conversely, businesses in which the foreign investor has most of the
decision-making power, may prioritize the wellbeing of the foreign investor and this may
not correspond with the wellbeing of the locals and their culture.
Therefore, I aim to support the claim that countries who set boundaries on how
foreigners can invest in businesses in their country, are better able to organize the
business in a way that is beneficial to the well-being of locals. As supported in the section
about the importance of culture, the well-being of a society is highly dependent on its
culture. Hence, policies that set rules on how foreign investments can occur, are more
likely to preserve their culture, either by taking action to protect it, or by prohibiting
business transactions and systems that are detrimental to the local culture.
30
Methodology
For the purpose of examining the effects of foreign direct investment (FDI) on
preservation of culture in countries in the global south I will conduct a cross-sectional
comparative case study analysis utilizing methods of difference. Before beginning
analysis, I will explain why I chose this method and why the selected cases provide the
circumstances necessary for this methodology. Cases were selected on the basis of
available government information for each country as well as the amount of research that
has been conducted in that country. The availability of information and research in my
countries of choice is important to ensure validity in my research. The case selection
processes will be described for each country selected for analysis. Then the key variables
of my analysis, FDI, culture, and policies that limit FDI, will be defined and explained in
relation to how they can be qualitatively identified.
Foremost, I chose to utilize two cross-sectional case studies by implementing the
methods of difference approach because there is a complex relationship between my
independent variable (FDI) and dependent variable (culture). While FDI can be easily
quantitatively analyzed, culture may have some elements that are quantitative, like
architecture or meal preference, but is largely a subjective experience of a place’s history,
customs, and values. This is one of the main reasons why this relationship is complex:
culture is hard to define, identify and measure quantitatively. Hence, it is very difficult, if
not impossible, to find precise data and numbers to fully represent culture and how FDI
affects its preservation. Therefore, it is more possible to analyze differences in the ability
31
of two countries to preserve their culture if these two countries have many other
demographic characteristics in common. By controlling for these factors, the only main
and evident measurable difference amongst them is how much FDI they accept.
For this method to work, I must choose two countries that have a set of
characteristics in common. These characteristics include geographic location, religion and
culture, participation in the global economy, and population size. Ideally these features
should be equal, but because no two countries are exactly the same, for the purpose of
this study I will consider it sufficient if these features are substantially similar.
Geographic location ensures that countries are in the same global region, and thus are
facing similar pressures in a global economy.
Once cases with the necessary similarities are selected, their openness to receiving
FDI will be the remaining factor to explain differences between the countries. One
country will be very enthusiastic to invite as much FDI as possible, by taking down
barriers that might discourage investors from investing in this country, or by allowing the
foreign investors to reap large benefits from FDI deals. However, the other country will
be more hesitant to receiving FDI, will have policies in place to limit the inflow of FDI
and might also have policies related to these that are intended to protect and preserve
their culture. Once these features are selected, the analysis can begin.
Why These Cases Make Good Comparisons
The cases that I have selected to examine are Thailand and Cambodia. I have
chosen these two cases because, in 2021, in Thailand, FDI constituted 9.9% of the gross
32
fixed capital formation, while in Cambodia FDI constituted 56.1% of the gross fixed
capital formation (UNCTAD 2022). This wide divergence in percentage of dependency
on FDI, noticeable in Figure 1, creates a good basis of comparison to determine the effect
of FDI on preservation of culture. Another major difference between these two countries
can be noticed in open versus closed they are with their FDI policies. In Figure 2 it can be
noticed that based on the FDI Regulatory Restrictiveness Index Cambodia ranks below
0.10, meaning it is very open, and is slightly below the Organization for Economic Co-
Operation and Development (OECD) average in this index. Conversely, Thailand ranks
slightly below 0.30 in this Index, meaning it is more open. In fact, Thailand is above both
the OECD and non-OECD average, meaning that it is significantly more closed in this
index compared to many countries, not only Cambodia.
33
Figure 1
Foreign Direct Investment Inflows as a Ratio to Gross Fixed Capital
Formation, 2022. (percentage)
Source: UNCTAD, 2022.
Figure 2
FDI Regulatory Restrictiveness Index, 2019 (open = 0, closed = 1).
Source: OECD based on the OECD FDI Regulatory Restrictiveness Index methodology.
34
While Thailand and Cambodia differ greatly on their dependence on FDI, they
have many characteristics in common or that are at least relatively comparable. These are
their region in the world (Southeast Asia), geographical landscape, and shared border.
Simultaneously, they share an extremely similar culture compared to the other cultures of
this region. In fact, they both share the same historical roots dating back to the expansion
of the Khmer domain during the 9th
and 13th
century (Britannica). This civilization was
inspired by Indian and Hindu culture, which consequently spread to Thailand and
Cambodia. Because of this, the languages of these two countries share the same Mon-
Khmer roots (Britannica). They share the same national mantra of “nation-religion-king”,
as well as social norms, culinary traditions, literature, dramatic arts, and other socio-
ethnic features. Examples of cultural activities that both societies practice are kickboxing,
called Muaythai in Thailand and Kun Khmer in Cambodia, and Apsara dancing. Finally,
both countries are predominantly Theravada Buddhist, with 93 percent of Thai people
and 95 percent of Cambodians professing this faith (Rim 2023).
Moreover, Thailand and Cambodia are both active participants in the global
economy. A factor that can determine a country’s connectedness with other countries
around the world is trade. Trade is the sum of exports and imports of goods and services
measured as a share of gross domestic product. In the image below, the World Bank
(2022) gathered data regarding the trade tendencies and numbers between Thailand and
Cambodia, which we can observe in Figure 3 as being very similar.
35
The population of these countries is also comparable though is not the same.
According to the United Nations Population Division and the World Bank, in 2022,
Thailand had almost 72 million inhabitants, whereas Cambodia had almost 17 million
inhabitants. Though this difference is present, the population sizes of these two countries
are still similar compared to other countries in the South-East Asian region (e.g.
Indonesia: 275 million inhabitants, Philippines: 115 million inhabitants, Laos: 7 million
inhabitants). Furthermore, these two countries are so similar in other aspects, specifically
pertaining to culture and international involvement, that the difference in population is
not as important in the context of this comparison.
The shared religion, culture, geographical region, international engagement and
the difference in FDI constitute the control variables. These variables allowed me to more
Figure 3
Trade (% of GDP) – Cambodia, Thailand.
Source: World Bank, 2022.
36
easily determine the likeliness that the quantity of FDI inflows is the factor that causes a
negative effect on the preservation of culture in Thailand and Cambodia.
Independent Variable
The independent variable in this study is FDI. The FDI considered in this study
will be that of ownership stakes of foreign investors, companies, or governments in Thai
or Cambodian companies or projects. The data used in this study to measure FDI
inflowing into Thailand and Cambodia is gathered from widely accessible sources
including the World Bank and UNCTAD. The figures 4 and 6 below show the quantity of
FDI inflows, measured in current US$ billions, between 1970 and 2022, respectively in
Thailand and in Cambodia (World Bank 2022). It can be noticed how the quantity of FDI
into Thailand grew a great amount between 1990 and 2000. The next big jump can be
seen in 2010, after which the quantity of FDI inflows varied drastically in the range of 16
billion to -5 billion. It is possible that these large swings were caused by the Thai
government testing the implementation of new FDI policies during this time, as well as
by external influences (e.g. the 2008 financial crisis, COVID-19). The percentage that
FDI composes of Thailand’s GDP, observable in Figure 5, has also varied drastically over
time. The precise reasons are unclear and beyond the scope of my research.
37
Figure 4
Foreign Direct Investment, Net Inflows (BoP, current US$) – Thailand, (in billions).
Source: “International Monetary Fund, Balance of Payments database, supplemented by
data from the United Nations Conference on Trade and Development and official
national sources” as cited by World Bank, 2022.
38
On the other hand, in Cambodia, starting from the beginning of the 21st
century, a
steep increase in amount of FDI inflows can be noticed in Figure 6. After 2005, FDI
numbers grew somewhat consistenly through 2022. This scenario is different from that of
Thailand as Cambodia’s FDI numbers did not continuously change, rather they grew with
a steady momentum.
Figure 5
Foreign Direct Investment, Net Inflows (% of GDP) – Thailand.
Source: “International Monetary Fund, International Financial Statistics and Balance of
Payments databases, World Bank, International Statistics, and World Bank and OECD
GDP estimates” as cited in World Bank, 2022.
39
While these numbers show that there is a higher quantity of FDI flowing into
Thailand compared to Cambodia, we must take into account gross fixed capital formation
and population size. The percentage of gross fixed capital formation that FDI consitutes
is higher in Cambodia than in Thailand. In other words, Cambodia’s economy depends
more on FDI than Thailand’s does. This difference in percentage which FDI composes of
the GDP of these two countries can be noticed in Figure 5 and Figure 7.
Figure 6
Foreign Direct Investment, Net Inflows (BoP, current US$) – Cambodia, (in billions).
Source: “International Monetary Fund, Balance of Payments database, supplemented by
data from the United Nations Conference on Trade and Development and official
national sources” as cited by World Bank, 2022.
40
Dependent Variable
As explained previously, culture is a complex phenomenon constituted of many
elements. For this reason, I measured culture in a multitude of ways, using both
qualitative and quantitative evidence, drawing from a variety of sources, such as books,
newspaper articles, journal articles, international organization websites, Non-Profit
websites, government websites, journalist blogs, local people’s personal blogs, and
Figure 7
Foreign Direct Investment, Net Inflows (% of GDP) – Cambodia.
Source: “International Monetary Fund, International Financial Statistics and Balance of
Payments databases, World Bank, International Statistics, and World Bank and OECD
GDP estimates” as cited in World Bank, 2022.
41
interviews. I used methods of difference to show that FDI is the agent which is causing
the difference in the ability of Thailand and Cambodia to protect their culture.
The first section “Qualitative Evidence” provides details regarding the sources
used and then explains what elements were used to represent culture. Here, culture was
measured by observing the ability of locals to continue their traditional work, of the
ability of locals to continue living in their town versus needing to migrate to find a
different job, and of the importance attributed to Muaythai and Kun Khmer boxing.
The second section “Quantitative Evidence” does the same, but here culture was
measured by evaluating the change over time of the quantity of people who speak the
local languages versus the official language, of the attitudes of locals from collectivist to
individualist, of their change in priorities, and of levels of religiosity. Additional data
regarding Thais and Cambodians’ opinions about external influences on their country are
included as they are useful towards gaining a fuller picture of the situation, though they
don’t directly prove my hypothesis..
Qualitative Evidence
The first section of my findings is qualitative and mostly based on the article “Is
foreign investment truly a force for good?” written by Zafirah Mohamed Zein (2021) in
collaboration with “Open Development Cambodia” and published in the “Kontinentalist”.
Open Development Cambodia (ODC) is an NGO open data webpage that provides
information about Cambodia and its social and economic development. This organization
values uncensored transmission of information to all members of society with no
42
restrictions and transparency. ODC claims that they “[do] not promote any particular
perspective, agenda or bias other than to provide objective information about Cambodia
and its development” (2021).
Kontinentalist is a creative data webpage that aims to “bridge the gap between
research and the public” by extracting meaning out of cold data and by providing more
context to the information that is examined. This organization uses an interdisciplinary
approach in their data storytelling and values bringing light to unheard voices, as well as
being transparent regarding where they get their information. This organization was
founded by Lee Han Shih (Hans), a Singaporean journalist who was a civil servant, a
professor and long-time correspondent with the Business Times.
Zein’s article in the Kontinentalist (2021) draws his information from Open
Development Cambodia, the U.S. Department of State, the China Dialogue, the National
Institute for Defense Studies, interviews conducted by the Cambodian Center for
Independent Media, and others. This wide variety of sources ensures us that the story
Zein narrates about what foreign investors are doing to villages in Cambodia, is well
supported.
Moreover, to discuss how tourism is affecting these two countries, I drew data
from the United Nations Development Program (UNDP), the UN agency responsible for
international development; Thailand Policy Lab Team, a policy innovation lab run
established by the UNDP; The Diplomat, an Asia-Pacific magazine that focuses on
geopolitics, defense, economics, social, and environmental issues; research from the EHL
43
Hospitality Business School, the world’s leading hospitality University in Switzerland;
and the Kontinentalist. Information regarding land concessions was used from the China
Dialogue, an independent, non-profit organization dedicated to promoting a common
understanding of China’s environmental challenges.
Transitioning into the details about the operationalization of culture and its
preservation, the ability of locals to continue their traditional work was examined. This
was used as a means through which I could measure culture because traditional practices
are an important element of culture. In many civilizations people can financially support
themselves and their families through their cultural practices. For instance, in Bali many
people make a living by selling religious offerings at the market. These offerings
represent a gift that humans give to the gods to show their gratitude in their regards and
are made from natural materials such as banana leaves, flowers, rice, fruit, and incense.
To a foreigner, these offerings might seem to have no value, but for the Balinese people
they are essential for religious ceremonies, hence they provide other Balinese with a
stipend by buying their offerings. If the value attributed to cultural things, like the
Balinese offerings, were to decrease (because of external influences), then locals might
not be able to support themselves by continuing these traditional practices and might
have to abandon them to find another job that does not possess cultural meaning.
Moreover, if Chinese foreigners in Cambodia were to overfish utilizing industrial means
and pollute the water in the rivers where local Cambodians have fished for centuries, this
might push the locals to migrate elsewhere abandoning their traditional fishing practice to
find a different non cultural job elsewhere. Additional context is provided regarding the
44
ways in which unregulated tourism effects the ability of locals to continue their
traditional practices.
Another way I assessed change in culture was through how much importance is
attributed to the art of boxing, which represents an essential part of both the Thai and
Cambodian cultures. These martial arts of “Kun Khmer” in Cambodia, and it’s semi-
equivalent “Muay Thai” in Thailand emphasize the use of punches, kicks, elbows, and
knees during combat with the opponent. Before the fight, a traditional dance,
accompanied by traditional music, is performed to honor the fighters’ teachers and
ancestors. This shows how Kun Khmer and Muay Thai are not only combat sports and
sources of national pride, but also rituals that are deeply entrenched in the cultures and
histories of these people (Wheaton 2023). Hence, I compared the wealth of boxers in
these two countries to determine how much importance is attributed to their art, which
indicates how well this aspect of culture has been maintained.
Quantitative Evidence
The second section of my findings is based on data provided by the Asian
Barometer Survey (ABS) is a renowned organization funded in 1971 by the National
Taiwan University that collects public opinion data on issues such as political values,
democracy, governance, human security, and economic reforms. It is recognized by the
International Social Science Council of UNESCO. Moreover, the Oxford Handbook of
Comparative Politics has listed the ABS as an important global research project in the
political science field. ABS uses a randomized method for selecting sampling units and it
45
does this by using census household lists or a multistage area approach. By doing so ABS
hopes to represent the totality of the adult, voting-age population in each country
surveyed.
ABS is able to justify its representation of the entire adult community of a country
in South-East Asia because of the many steps involved in creating and conducting the
surveys. These steps include intensive training of fieldworkers who pass through
intensive, week-long training programs to familiarize themselves with the Asian
Barometer research instrument, the ABS sampling methods, and the cultural and ethical
context of interviews. Face-to-face interviews are conducted in the respondent’s homes or
workplaces in the language of the respondent’s choice. Local language translations are
prepared with the goal of accommodating every language group whose members
constitute at least 5 percent of the population. To check for accuracy, the local language
versions are screened through blind back-translation by a different translator and any
discrepancies are corrected. Moreover, ABS requires that all interview teams travel
together under the direction of a field supervisor. Finally, quality checks are enforced at
every stage of data conversion to ensure that information from paper returns is edited,
coded, and entered correctly for purposes of computer analysis.
In the Asian Barometer, responses regarding language are utilized to measure the
ability of the countries of interest to preserve their culture. Language is one of the most
noticeable aspects of a culture and the quantity of people who speak it and the frequency
at which it is spoken can represent a good indicator of how much the culture belonging to
that language is practiced. The question from the Asian Barometer that was utilized in
46
this study for this purpose was that pertaining to how much Thai and Cambodian
respondents speak their local language versus the official state language.
How much respondents demonstrated to believe in individualist versus collectivist
attitudes was also observed. The ‘Western’ world typically follows individualistic values,
which promote one’s own wellbeing over that of others, while the ‘Eastern’ world
typically follows collectivistic values, which promote the wellbeing of the community
over that of the individual. Questions from the Asian Barometer were useful to observe
people’s attitudes in Thailand and Cambodia regarding these values. I argue that it is
possible that Cambodia, who accepts more FDI than Thailand, might have more
individualistic values because of greater foreign influence. Because Cambodia is
traditionally a collectivistic country, changes in the ethics regarding an individual and
their role in the community could indicate a change in Cambodian culture. The Asian
Barometer asks very relevant questions of attitudes regarding individualistic and
collectivistic beliefs and values. Respondents are asked to state how strongly they agree
with the following statements: In a group, we should sacrifice our individual interest for
the sake of the group’s collective interest; For the sake of the national interest, individual
interest could be sacrificed.
Additionally, survey responses regarding what priorities Thais and Cambodians
had across the different survey waves were considered. Respondents were asked to
choose between protecting the environment as a given priority, and economic wealth and
creating jobs as a top priority. An option allowing the respondents to remain undecided
was also provided. Care for the environment is an important indicator of cultural
47
preservation because Thailand and Cambodia’s religion, Theravada Buddhism, promotes
respect for the environment (see more in the section “Thailand culture”).
Responses regarding levels of religiosity amongst Thais and Cambodians were
examined as religion plays a central role in both of these cultures. Respondents were
provided a scale to determine how religious they considered themselves to be.
Insights from Thais and Cambodians regarding their opinions on globalization are
also useful to understand in further depth the ideological environment in these countries.
The Asian Barometer asks its respondents how strongly they agree or disagree with the
statements: “Our country should defend our way of life instead of becoming more and
more like other countries”, “If people have too many different ways of thinking, society
will be chaotic” and “We should protect our farmers and workers by limiting the import
of foreign goods” (Asian Barometer). These responses are important to understand what
locals think about external influences, such as different and foreign ways of living and
thinking, have on their country. Moreover, it is useful to know whether locals believe that
foreign goods are hurting the local workers and farmers, as foreign goods often come
with foreign investment, unless a country specifically requires foreign investors to only
source the resources necessary for their business from inside the country.
Finally, the survey “What do Cambodians Think?” by Konrad-Adenauer-Stiftung
(KAS) and Spear Insights, was used to determine their quality of life and to provide data
regarding their belief that the environment is one of the country’s most pressing issues.
KAS is an association committed to achieving global peace and freedom through political
48
education, founded by Christian Democratic Union of Germany (CDU). Spear Insights is
a research and consultancy agency founded in 2020 in Cambodia with the purpose of
providing the public with data about the development of Southeast Asia.
49
Thailand
History
Prior to 1939, Thailand was called “Siam” (Britannica). In contrast with
Cambodia and many other countries in South-East Asia, Thailand was never colonized by
European powers. Rather, independent Siam was ruled by an absolute monarchy till the
Siamese revolution in 1932. This revolution was a bloodless coup that marked a turning
point in Thai history. This coup ended seven centuries of absolute monarchy and
established a constitutional monarchy (TheStraitsTimes). Thereafter, Thailand got its first
constitution, paving the way for social and political reforms. The constitution following
this coup required elected parliaments and there has been growing support for a
parliamentary democracy throughout the 20th
and 21st
centuries (Britannica).
The most interesting part of Thai history in relation to my research is that it has
never been colonized. The absence of colonization in Thailand is a peculiarity in South
East Asia because all countries in this region have experienced foreign dominance at
some point in time. For instance, Cambodia was colonized by the French, who integrated
the country into its protectorate called “French Indochina” for 90 years (1863-1953) and
by the Japanese during World War II (1941-1945) (BBC News). One possible explanation
for why the Thais are able to practice and protect their culture so well is because it has
remained untouched from foreign dominance and influence. Additionally, the Thai
government has come up with many laws to limit FDI and regulate the ways in which it
is used because they want to protect the best interest of their people, which includes
50
preserving their culture. Though it is not certain that the desire to protect Thai culture was
the primary motivating factor for the creation of laws to control FDI inflows, I argue that
the creation of these laws better enables Thailand to protect their culture.
Economic Status and International Engagement
Thailand was one of the world’s fastest growing economies before the Asian
Financial Crisis in 1997 (OECD 2022). Thailand then recovered from this crisis and its
economy has been growing moderately since the beginning of the 21st
century. Thailand
then suffered from a recession following 2020 due to the Covid-19 outbreak. This caused
Thailand’s economic growth to come to a halt and the government has been trying to
recover ever since. Regardless of these struggles, according to the Worldometer, whose
information is taken from the World Bank, in 2022 Thailand ranked as the 29th
highest
GDP in the world. Furthermore, Thailand is very engaged with the global economy as
trade composes about 135% of Thailand’s GDP (World Bank 2022).
Stance on FDI
Thailand historically has done very well at attracting FDI. Inward FDI has been
an important driver of economic growth since 2000. FDI stocks as a share of GDP
increased to 50% by 2017, which is considerably higher than the Association of Southeast
Asian Nations (ASEAN) average (excluding Singapore). Thailand is the third major FDI
destination in ASEAN, marginally behind Indonesia (OECD Investment Policy Reviews
Thailand). Japan, the United States and Singapore account for more than 60% of total
inward FDI in Thailand. Singapore is by far the largest investor from ASEAN as it
51
accounts for almost 80% of total FDI stocks coming into Thailand. More recently, FDI
from other countries such as China, Canada and Germany have increased as well.
(OECD).
Thailand continues to encourage investment from all the countries mentioned
above but it also seeks to avoid dependence on any one country as a source of investment
(US Department of State). Though Thailand was one of the first countries to recognize
the powerful role that foreign investors could play in fueling export-led growth, and was
quick in opening up to foreign investment, it did so selectively and with caution (OECD
2022). In contrast to many other emerging economies, Thailand has not backtracked on
those early FDI liberalization efforts, nor has there been much further liberalization since
Figure 8
FDI Regulatory Restrictiveness Index, by sector: Thailand vs, ASEAN vs.
OECD, 2019
Source: OECD 2022.
52
then. Over time, other ASEAN Member States have caught up and even surpassed
Thailand in terms of openness to FDI, as can be noticed in Figure 8.
This figure shows how FDI restrictiveness varies among industries in Thailand, as
well as in ASEAN and Organization for Economic Co-Operation and Development
(OECD) member countries. Compared to the member countries of these organizations,
Thailand generally ranks. higher on the FDI Regulatory Restrictiveness Index in most
industries. As a result, Thailand is no longer attracting FDI as it used to (OECD 2022).
The Foreign Business Act
These laws that limit the amount of FDI inflow and control the distribution of FDI
among industries, as well as the ways in which investors can conduct business in
Thailand, can be found in the “Foreign Business Act, B.E. 2542 (1999)” (FBA). This act
was created and passed by the Thai King Bhumibol Adulyadej, with the help of the
National Assembly (Investment Policy Hub). Section five states that this act considers
various benefits and threats that FDI poses on Thailand’s wellbeing and prosperity.
Specifically, in this section, it is stated that “In granting permission to foreigners for the
operation of businesses under this Act, regard shall be had to advantageous and
disadvantageous effects on national safety and security, economic and social development
of the country, public order or good morals, national values in arts, culture, traditions and
customs, natural resources conservation, energy, environmental preservation, consumer
protection, sizes of undertakings, employment, technology transfer and research and
development” (Investment Policy Hub). This act demonstrates the rigor with which
53
Thailand creates its restrictive FDI policies and the amount of thought that was put into
them.
The act continues by explaining who is not eligible for operating a business in
Thailand. People who are not eligible for this are those who have been deported and
foreigners who are staying in the country without permission. Those whose nationality
has been revoked or foreigners who were born in the Kingdom without having official
Thai nationality must obtain a license from the Director-General and may operate only
such businesses, and in such localities, as prescribed in the Notification issued by the
Minister with the approval of the Council of Ministers and published in the Government
Gazette. This extremely detailed description of who is allowed to invest in Thailand’s
businesses is interesting to note because it reflects how much the Thais care about who
they let conduct business in their country, as well as the ways in which foreign business is
conducted and the effects of FDI on the wellbeing of the people and environment of
Thailand.
Section 8 of this act declares that “no foreigner may operate such businesses in
respect of which Thai nationals are not yet ready to compete with foreigners, unless upon
obtaining permission from the Director-General with the approval of the Commission”
(FBA). This is another example of how detailed the FDI limitations are and how carefully
the Thai government tailors business opportunities to the wellbeing of their local workers
and businesses over that of foreign ones. Moreover, the Thai government has taken into
account how important it is for locals to own a large percentage of businesses funded by
foreigners in Thailand because this directly correlates with how much power the local
54
Thai people have in the logistics of business execution and decision-making processes. In
fact, section 15 states that “A foreigner which is a juristic person may operate any
business specified in List Two only where not less than forty percent of its shares are held
by Thai nationals or juristic persons which are not foreigners under this Act” (Investment
Policy Hub). The law is set up so that Thai people will benefit economically from any
foreign business in the country.
The following paragraphs address how the FBA restricts businesses for
foreigners. Foreigners, considered as non-nationals, are prohibited from engaging in
activities that have the potential of affecting national safety or security, arts and culture,
traditional industries, folk handicrafts, natural resources, and the environment. These
activities include “newspaper and radio broadcasting stations and businesses; agricultural
businesses; forestry and timber processing from a natural forest; fishery in Thai territorial
waters and specific economic zones; extraction of Thai medicinal herbs; trading and
auctioning of antique objects or objects of historical value from Thailand; making or
casting of Buddha images and monk alms bowls; and land trading” (FBA). This section
of the Foreign Business Act prevents foreigners from working and investing in sectors
that have cultural significance, consequently serving to protect local culture. There are
also restrictions on foreigners becoming involved in tourism-related businesses that
indirectly affect the local culture: “hotels; guided touring; selling food and beverages; and
other service-sector businesses” (FBA). Thailand’s long detailed list of rules regarding
the capabilities and limitations of foreign investors has attempted to limit the negative
impacts of FDI on local culture.
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Independent Study - College of Wooster Research (2023-2024)

  • 1. DOES FOREIGN DIRECT INVESTMENT NEGATIVELY AFFECT PRESERVATION OF CULTURE IN THE GLOBAL SOUTH? CASE STUDIES IN THAILAND AND CAMBODIA By Antonia Owens Detwiler An Independent Study Thesis submitted to the Department of Global & International Studies at The College of Wooster March, 2024 in partial fulfillment of the requirements of I.S. Thesis Advisor: Matthew Krain Second Reader: Désirée Weber
  • 2. i Abstract Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
  • 3. ii Sintesi È possibile che elementi della globalizzazione, come gli Investimenti Diretti Esteri (IDE), hanno degli effetti negativi sull’abilità dei peasi in via di sviluppo di proteggere la loro cultura? Questa ricerca intende rispondere a questa domanda attraverso due casi di studio illustrativi comparate utilizzando metodi di differenza. I peasi paragonati sono la Thailandia e la Cambogia, in quanto si trovano nella stessa regione e hanno una simile cultura. Nonostante ciò, sono diversi nel loro approccio riguardo IDE. Infatti la Thailandia ha molti legislazioni restrittive e limitative poste sugli IDE, mentre la Cambogia non hesita di accetare la maggior parte dell’IDE che le viene offerto e impone meno limitazioni. I risultati di questa ricerca suggeriscono che IDE da paesi con grande influenza internazionale con un prodotto interno lordo (PIL) alto (e.g. China, U.S.) mette in difficoltà l’abilità dei peasi con un PIL minore (e.g. Cambogia) di proteggere la loro cultura. Inoltre, l’abilità, o la mancanzza d’abilità, dei paesi che ricevono IDE di proteggere la loro cultura e’ amplificata dall’esistenza e l’implementazione di legislazioni restrittive imposte su IDE dai loro governi.
  • 4. iii Dedication To the communities around the world whose voices are unheard, whose cultures are disappearing and whose lives are being affected by unregulated foreign direct investment.
  • 5. iv Acknowledgements Foremost, I would like to acknowledge my appreciation for my mother Francesca and her dedication towards helping me achieve my dreams. It is thanks to her unconditional love and support that I was able to win a scholarship to The College of Wooster, and consequently conduct this extensive research. I would like to acknowledge my appreciation for my adviser Matthew Krain, who has guided me through this research process with a positive attitude, dedication, and patience. He has also been essential in helping transform my complex ideas into concrete phenomena which can be measured, rendering my research more comprehensible to the reader and my findings more meaningful. I would also like to thank the Writing Center staff Nicki Benya and Gillian Lee. They have been very helpful in rendering my writing more intelligible and in providing feedback regarding the format of my research. Moreover, I would like to thank my host family, professors, and friends in Bali, who have taught me about their local traditions and mindset, and about the ways in which globalization and foreign investments are changing their culture. It is thanks to their openness in teaching me about their life, that I was inspired to research this topic. Finally, I would like to thank The College of Wooster, for financially supporting my education and for providing me with this amazing Independent Study opportunity, thanks to which I have learned how to efficiently conduct research.
  • 6. v Table of Contents Abstract............................................................................................ i Sintesi ..............................................................................................ii Dedication ......................................................................................iii Acknowledgements ....................................................................... iv Table of Contents........................................................................... v List of Figures..............................................................................viii List of Tables ................................................................................. ix Introduction.................................................................................... 1 Literature Review .......................................................................... 4 Background History of Globalization ............................................................................. 6 Positive and Negative Effects of Contemporary Globalization ...................................... 7 Importance of Culture ................................................................................................... 10 Foreign Direct Investment............................................................................................. 13 Positives and Negatives of FDI..................................................................................... 14 Why These Perspectives are Under-Researched........................................................... 20 Hypothesis & Argument................................................................................................ 25 Methodology ................................................................................. 30 Why These Cases Make Good Comparisons................................................................ 31 Independent Variable .................................................................................................... 36 Dependent Variable....................................................................................................... 40 Qualitative Evidence.................................................................................................. 41 Quantitative Evidence................................................................................................ 44 Thailand........................................................................................ 49 History........................................................................................................................... 49 Economic Status and International Engagement........................................................... 50 Stance on FDI................................................................................................................ 50 The Foreign Business Act ............................................................................................. 52 Thai Culture................................................................................................................... 55
  • 7. vi Qualitative Findings...................................................................................................... 58 Migration................................................................................................................... 58 Maintenance of Traditional Livelihoods ................................................................... 58 Tourism...................................................................................................................... 60 Muay Thai Boxing ..................................................................................................... 61 Quantitative Findings.................................................................................................... 64 Language ................................................................................................................... 64 Collectivist vs. Individualist Attitudes ....................................................................... 66 Environment............................................................................................................... 68 Opinions..................................................................................................................... 70 Religion...................................................................................................................... 75 Cambodia...................................................................................... 78 History........................................................................................................................... 78 Economic Status and International Engagement........................................................... 80 Stance of FDI ................................................................................................................ 82 Cambodian Culture ....................................................................................................... 84 Qualitative Findings...................................................................................................... 85 FDI Causes Locals to Migrate .................................................................................. 88 FDI Causes Loss of Traditional Livelihoods............................................................. 95 FDI Leads to Mass Tourism...................................................................................... 99 Kun Khmer Boxing .................................................................................................. 102 Quantitative Findings.................................................................................................. 104 Language ................................................................................................................. 104 Collectivist vs. Individualist Attitudes ..................................................................... 107 Environment............................................................................................................. 109 Opinions................................................................................................................... 111 Religion.................................................................................................................... 116 Comparison ................................................................................ 118 Qualitative Evidence ................................................................................................... 118 Quantitative Evidence ................................................................................................. 120 Conclusion .................................................................................. 124
  • 9. viii List of Figures Figure 1 - Foreign Direct Investment Inflows as a Ratio to Gross Fixed Capital Formation, 2022………………………………………………………………………….33 Figure 2 - FDI Regulatory Restrictiveness Index, 2019…………………………...……33 Figure 3 - Trade (% of GDP) – Cambodia, Thailand……………………………………35 Figure 4 - Foreign Direct Investment, Net Inflows (BoP, current US$) – Thailand, (in billions)…………………………………………………………………………………..37 Figure 5 - Foreign Direct Investment, Net Inflows (% of GDP) – Thailand……………38 Figure 6 - Foreign Direct Investment, Net Inflows (BoP, current US$) – Cambodia, (in billions)…………………………………………………………………………………..39 Figure 7 - Foreign Direct Investment, Net Inflows (% of GDP) – Cambodia…………..40 Figure 8 - FDI Regulatory Restrictiveness Index, by sector: Thailand vs, ASEAN vs. OECD, 2019………………………………………………………………………….….51 Figure 9 - Amazing Muaythai Festival 2023 poster…………………………………….63 Figure 10 - Inauguration of the Muaythai Festival 2022………………………………..63 Figure 11 - Inauguration of the Muaythai Festival 2022 (fireworks)…………………...63 Figure 12 - Private Property Sign at Sihanoukville’s Independence Beach…………….90 Figure 13 - Cambodian shop Owner is Told to Move by Workers……………………...92 Figure 14 - Map of Land Concessions and Deforestation………………………………94 Figure 15 - Illegal Fishing Nets…………………………………………………………96 Figure 16 - Sand-Filling Site in Mangrove Forest………………………………………97 Figure 17 - Bayon Television Showing Kun Khmer Boxing…………………………..104
  • 10. ix List of Tables Thailand Table 1 - What language do you speak the most at Home?..............................................66 Table 2 - In a group, we should sacrifice our individual interest for the sake of the group’s collective interest……………………………………………...…………….…..67 Table 3 - For the sake of the national community/society, the individual should be prepared to sacrifice (wave2). For the sake of national interest, individual interest could be sacrificed (wave, 3 and 4)…………………….…………………………………...….68 Table 4 - Which of these statements comes closer to your view?....................................69 Table 5 - If people have too many different ways of thinking, society will be chaotic....71 Table 6 - Our country should defend our way of life instead of becoming more and more like other countries………………………………………………………………...…….72 Table 7 - We should protect our farmers and workers by limiting the import of foreign goods………………………………………….……………………………………….....73 Table 8 - Foreign goods are hurting the local community………………………………74 Cambodia Table 9 - Would you describe yourself as very religious?................................................75 Table 10 - What language do you speak the most at Home?...........................................105 Table 11 - In a group, we should sacrifice our individual interest for the sake of the group’s collective interest……………………………………...……………………….107 Table 12 - For the sake of the national community/society, the individual should be prepared to sacrifice (wave2). For the sake of national interest, individual interest could be sacrificed (wave, 3 and 4)…………………………………………………………...108 Table 13 - Which of these statements comes closer to your view?.................................109 Table 14 - If people have too many different ways of thinking, society will be chaotic.112 Table 15 - Our country should defend our way of life instead of becoming more and more like other countries………………………………………………………………..113 Table 16 - We should protect our farmers and workers by limiting the import of foreign goods……………………………………………………………………………………114 Table 17 - Foreign goods are hurting the local community.……………………………116 Table 18 - Would you describe yourself as very religious?.............................................117
  • 11. 1 Introduction With the rapid increase of globalization, more complex relationships are forming amongst civilizations across the world. These relationships are characterized by the exchange of wealth, goods, and ideologies between countries. These rapports are heavily shaped by historical events, including colonization, and power dynamics. Most scholarly research that has been conducted regarding globalization focuses on the positive effects of this phenomenon and has been written and executed through Western, economic, and scientific lenses. However, there is a lack of research regarding the negative effects of globalization and Foreign Direct Investment (FDI) on communities in the Global South. There is even less research regarding the potential negative effects of FDI on the ability of countries in the Global South to protect their culture. This gap in research surprised me as I have observed the negative effects that globalization and unrestricted FDI have on the people of Bali, Indonesia. During my immersive study abroad experience living with a local family in a rural Balinese village, I discovered how the Balinese culture is changing as a result of increasing FDI inflows, which are often directed to the construction of tourist accomodations (like hotels, restaurants, shopping centers). The economy of the Balinese Island has transitioned from depending on rice cultivation and commerce, which is a tradition islanders have been practicing for centuries, to depending on accommodating tourists. I believe this heavy dependence on the tourism sector is largely a legacy of Dutch Colonization, but also results from the lack of government policies that limit the
  • 12. 2 amount of FDI inflow and that manage the ways in which foreigners can invest in businesses in the island. This has caused the new generation of Balinese people to abandon the ancient practice of rice cultivation to learn how to accommodate tourists by learning English and Business, as well as by working in cafes, souvenir and clothing shops, as motorcycle taxi drivers, and by opening their own restaurants. This shift in focus has caused Balinese to leave their villages, migrate to the South, and pick up tourism jobs because the salary in this field is higher as a result of the drastic currency difference between the Indonesian Rupiah and other currencies including the USD and the Euro. As a result, cultural customs are becoming less and less practiced. This increases the probability of this culture’s disappearance. Moreover, the emphasis placed on tourist accommodation has not only come at the cost of cultural preservation, but also of environmental conservation and has increased Balinese dependence on other wealthy countries who invest there. Learning about the ways in which increased globalization and FDI in Bali have affected the Balinese culture and people inspired me to question how advantageous globalization really is, whether its benefits are reaped by some countries more than others, and whether it has a positive or negative effect on the ability of countries in the Global South to protect and preserve their culture. With the purpose of answering this question I chose to examine FDI as a representative element of globalization. Because of uneven global interdependence, the direction of FDI that I examined was that flowing from wealthy powerful countries to less wealthy less powerful countries. This led me to conduct a cross-sectional comparative case study analysis utilizing methods of difference.
  • 13. 3 The countries I chose as case studies are Thailand and Cambodia. These two countries are similar in culture and level of international engagement, but differ in how restrictive they are towards accepting and managing FDI. I hypothesize that FDI negatively affects the ability of countries in the Global South to preserve their culture. Drawing upon my case studies, I predict that Thailand, which has more restrictive FDI policies, will be able to protect their culture more thoroughly than Cambodia, which has significantly less restrictive FDI policies. My first chapter reviews the existing literature regarding globalization and its implications, the importance of culture, and FDI and its positive and negative effects on communities in the Global South. I conclude by presenting my hypothesis. My second chapter outlines the quantitative and qualitative methodology used to test my hypothesis. In the following chapters I provide background information on Thailand and Cambodia as well as examine the ways in which FDI is affecting their ability to preserve their culture. I then compare my findings and conclude by explaining the results of my study, which suggest that FDI does in fact significantly challenge countries’ ability to protect their culture. I end the study with some reflections about the negative effects of FDI on preservation of culture and offer some suggestions for future research about this subject as well as about other elements of globalization.
  • 14. 4 Literature Review In this section, the concepts expressed in the literature from which I base my hypothesis will be described. Foremost, the history of human’s intrinsic need to progress and exchange goods and ideas will be explained, alongside the major turning points in history that have led to modern day globalization. To offer a wide range of perspectives on this topic, the positive and negative attributes and effects of globalization will be described and compared. Following this, definitions will be given to the concept of culture and its importance will be addressed. Then foreign direct investment will be defined, and its positive and negative effects will be articulated. An explanation of why these topics are under-researched is included. Finally, my argument and hypothesis will be delineated. First, it is necessary for me to provide an explanation for the usage of some terminology in this study regarding the categorization of countries. For the purpose of this study I will be utilizing the terms ‘global north’, ‘developed countries’, ‘industrialized countries’, ‘the West’ to indicate countries who possess a substantial amount of power and control over other countries. By power I mean economic wealth, decision-making authority, political and social influence. These countries are also ones who have a long history of colonizing other societies and exploiting their resources for their own benefit (Khan, et al., 2022). Some examples of countries in the ‘global north’ are the United States, countries in the European Union (EU), and China. Typically, these countries (excluding China) are seen as ‘The West’, however this is another term that often captures and categorizes global power. Thus, for the purpose of this thesis, the terms ‘global north’,
  • 15. 5 ‘developed countries’, ‘industrialized countries’, ‘the West’ will all be used to describe a higher position of global power, largely in regard to economic resources available. Conversely, the ‘global south’ represents countries who typically have lower economic power and possess less influence on countries around the world. Countries of the ‘global south’ are also referred to as ‘developing’. This does not mean that all countries belonging to the category of less powerful reside in the south, and that all powerful countries reside in the north, though this often is the case. The terms ‘global south’ and ‘global north’ are mostly used to categorize countries based on their economic and political power. The terms ‘global south’ and ‘global north’ have been created with the purpose of finding better alternatives to ‘first, second, and third world countries’ because this implies a ranking order of value among countries. Though the terms mentioned above are a better substitute for the terms that insinuate a ranking system, they are also controversial in academia because ‘developing countries’ implies that these countries have not fully developed yet. The problem is that scholars are defining development through a western lens, and thus are setting the goal post for development based on their own value standards. However, development can look differently for all cultures as they each have their own values and ways of organizing society that they may consider advanced, but may not be seen as such to the western world. Nevertheless, I need some kind of terminology to explain uneven global interdependence and the differences of opportunities and power between countries.
  • 16. 6 Background History of Globalization According to Smithsonian Institute Research (2024), mobility, as well as the exchange of goods, cultural artefacts, and ideas, has been a characteristic of human existence since the beginning of our time. Initially, interactions and exchanges between people occurred as a means of survival as people shared amongst each other the skills and objects they acquired to live in certain environmental conditions. Gradually, this necessity became a commodity as we no longer only exchange goods that are necessary for survival, rather we also exchange goods to fulfill our gratifications and to allow greater variability of consumer options. Peter N. Stearns (2016) draws upon the works of many historians to argue that 1000 CE, 1500, and 1850s represent turning points in the history of globalization. The period between 1000 and 1500 was characterized by interregional trade in the Afro- Eurasian area, which was facilitated by the Indian Ocean and the ancient Silk Roads. During this time there was a growing demand for trade of goods such as gold and spices. Improvements in means of transportation played an important role in facilitating this movement. The period following 1500 is characterized by an increased movement of people and flow of goods. During this time, trade expanded to the Americas, the Pacific and Australasia. Here, we see the first global exchanges of crops and domestic animals, the emergence of the first global trading companies, the first global transmission of diseases, and a global division of labor. These new forms of exchanges that spanned across the globe changed the direction of history as distant civilizations now became connected through the circulation of ideas, goods, and people.
  • 17. 7 It is important to understand how trade and communication amongst people belonging to different communities and different parts of the world is an inherent characteristic of the human species. Simultaneously, Stearns argues that these phenomena have been amplified following the industrial revolution of the mid-eighteenth century. This new era was characterized by the exchange of luxury goods/commodities enabled by great improvements and inventions in communication modalities and transportation, specifically of international steam ships and sea-bed telegraph cables. The twentieth century marks the biggest transformation of international relations and trade as new technologies and air travel arose (necessary for World Wars I and II). This allowed people from parts of the world that hadn’t communicated or traded with one another, because of physical distance, to do so. Inevitably, this has drastically changed the lives of most communities around the world, for better or for worse (Stearns 2016). Trade and communication continue to play an essential role in driving economies, politics and cultures of the world. Positive and Negative Effects of Contemporary Globalization This brings us to the present day in which globalization can be defined by four major shifts. These are the increased flow of goods and labor between countries, the liberalization of financial markets, and intensified exchange of information through technological advancements (Mills 2009). Globalization can also be defined as the process through which national and regional economies, societies and cultures have become integrated through the global network of trade, communication, immigration, and transportation. This definition fails to take into account how these exchanges are
  • 18. 8 imbalanced. In fact, globalization is not quite the equal exchange of goods and knowledge between countries, rather it comprises the spread of only a few ideologies, for example capitalism, around the world. This means that one system, owning its own values, goals, and ways of viewing life, is spread across the globe. Inevitably, this signifies that this interconnectedness between countries is uneven and benefits some more than others (Mills 2009). A theory called McDonaldization supports this claim as it argues that cultural influence flows primarily from the United States to the rest of the world (Clark, Terry, and Lynette). There are many reasons why globalization is a positive force in the world and why the capitalist way of living should be integrated in most countries. These reasons include efficient trade of goods and services, the spread of technological advancements, economic growth of a country, increased capital available for investment in productive enterprises, more job opportunities, increased economic wellbeing of individuals (decrease in quantity of people in poverty), and the potential improvement of the education and health system (Goldin & Kenneth 2007). Others argue that there are moral benefits to the spread of Western ideals because they could improve the wellbeing of other communities. Examples of these values are democracy, equality between people regardless of ethnicity, gender, religion, political orientation, human rights, and freedom of speech (Seita 2017). Nevertheless, globalization and the spread of capitalism also causes many problems, such as economic inequality both within and between countries, exploitation of people in lower GDP countries, growing instability of the global financial system, and
  • 19. 9 environmental abuse and degradation (Mills 2009). Mills also argues that globalization has caused a process of homogenization and the emergence of a global culture, created at the expense of national cultures. In this research I claim that globalization also increases the probability that cultures become less practiced and leads to their extinction. In other words, it is possible that the spread of only a few cultures, belonging to the most economically and politically powerful countries is leading to the extinction of cultures of less powerful countries. It is also important to acknowledge the lack of research regarding the effects of globalization on culture. More specifically, there is a literature gap regarding the effects of the spread of only a few dominant ideologies from powerful countries to less powerful countries. Most literature, media and research examine the positive effects of globalization, of the spread of democracy and the capitalist system. The mainstream media strongly believes in globalization being the answer to many contemporary issues, including poverty and unemployment. Many scholars and international organizations, like the World Bank, believe that ‘Western countries’ need to save other countries who are struggling financially and who do not have the same means of organizing their society. It is possible to observe an example of this in the World Banks’s “Why Wealthy Countries Must Step Up Their Contribution to Fight Global Poverty” (2019). In reality, these societies do not necessarily need to be saved as they are often happy living their life in different ways, with different values and priorities. This does not take away from the fact that cases of poverty, political unease, and social unrest should be addressed and aided. However, these issues in ‘developing countries’ are often a result of
  • 20. 10 colonization and exploitation, which is somewhat connected to the spread of the dominant ‘Western’ ideology (globalization). This claim is thoroughly explained by the American-German sociologist and economic historian Andre Gunder Frank in his work “The Development of Underdevelopment” (2004), in which he illustrates the world- systems theory and the dependency theory. Frank's World-System Theory (2004) claims that the world economy in not a collection of independent nations, rather it is a system in which some nations dominate and other subordinate. This system is characterized by a division of labor where the core nations, who dominate global trade and finance, exploit the peripheral nations, who are the suppliers of raw materials and cheap labor. This system perpetuates a cycle where peripheral nations rely on core nations for capital, technology, and market access, hindering their independent economic development. After reflecting upon this information, one could argue that the circumstances that need help in ‘developing’ countries are often an effect of colonization. Therefore, more research regarding the negative effects of globalization conducted with the intent of understanding the other side of the story, which is not sufficiently covered by the mainstream literature, is necessary. Knowledge is the first step towards making a positive difference in the world. Importance of Culture According to Terry Eagleton (2016): “‘culture’ is an exceptionally complex word – the second or third most complex word in the English language, so it has been claimed – but four major sense of it stand out. It can mean (1) a body of artistic and intellectual
  • 21. 11 work; (2) a process of spiritual and intellectual development; (3) the values, customs, beliefs and symbolic practices by which men and women live; or (4) a whole way of life”. Culture is a broad concept that can be defined in many ways, but is often broadly understood as a collection of beliefs, values and traditions that are transmitted across generations (Tonja et al. 2021). Culture is also the lens through which different civilizations view and understand life. Culture can also be understood as a product of knowledge that has been acquired and passed on by the ancestors of a civilization as a result of them adapting to the natural environment in which they were located (Eagleton, 2016). There are many cultures in the world and their characteristics can vary drastically or can share some elements in common. The difference between cultures usually depends on the geographical distance of the people who possess these cultures (Hong and Cheon 2017). However, in the contemporary world globalization has facilitated the spread of knowledge. Similarly to goods and capital, this spread of knowledge is not even amongst countries. Western values are considered more valid and important than values and traditions of other countries. This is a product of many years of colonization and world domination from Western countries and world powers (Stearns 2016). Some scholars, like Goldin and Kenneth (2007), argue that sentiments and movements that defend gender equality, human rights, democracy, mental health, and value of education, which are typically associated with western ideology, should be spread across the world and that they could improve the lives of many. On the other hand,
  • 22. 12 having only one culture’s ideology spread and influence the way other, less globally powerful cultures develop can lead to disadvantages as well. This can be seen very prominently in the way the United States has utilized its position as a global superpower to promote the values of its economic and social systems abroad. The western ideology promoted by the United States is rooted in capitalism whose main purpose is the accumulation of capital and maximization of profit (Cambridge Dictionary). Because the objective of capitalism is the accumulation of wealth, certain morals must be ignored or defied to achieve this goal. These values which often are sacrificed include human rights, equality, a sense of community, respect of the environment, respect of elderly, a sense of harmony with the universe, appreciation for what one has, and content with living a minimalist life (Horkheimer 1974; Horkheimer and Adorno 1972; Marx 1873). Despite the widespread belief in the West that Western knowledge is superior to that of other cultures, it is limited. In fact, Hong and Cheon (2017) suggest that any given culture’s views are limited to the truth of that civilization. Every civilization has a different way of viewing the events that occur around them and a different way of reacting to them. Learning about cultures different from one’s own can be beneficial because it helps people understand and emphasize with others, it aids a person’s ability to adapt to new and unknown circumstances, and helps the mind interpret information in a multitude of ways. These attributes are acquired through learning about different cultures and are very useful to widen one’s perspectives on life and cross-cultural communication skills. Thus, the process of learning about cultures itself can provide people with a broader set of intellectual tools necessary to envision and formulate solutions to
  • 23. 13 contemporary issues. The empathy that emerges from understanding the values of different societies can reduce the potential for conflict, as culturally aware individuals are often more open-minded and can address problems more efficiently. In addition to promoting cross-cultural understanding, learning about a culture can be a tool for its preservation, both internally and externally. Preservation of culture is important to more than broadening perspectives or improving problem solving skills, as it makes the voices of communities heard, which increases the likeliness of their needs being met (Hong and Cheon 2017). Foreign Direct Investment As defined by Adam Hayes (2023), foreign direct investment (FDI) is an ownership stake in a foreign company or project made by an investor, company, or government from another country. In other words, foreign direct investment occurs when a company or government invests in a business in a foreign country. According to the International Monetary Fund (IMF), foreign direct investment exists when the investor owns at least 10% of a foreign business (Amadeo 2022). This business arrangement is not only characterized by capital investment, but also the ability of the investor to have a certain degree of control over the business in which they invested. The investor can influence the decision-making process and the management of the business, directly depending on the investor’s ownership share. (Hayes 2023). FDI can originate bidirectionally from countries in the global south to countries in the global north and inversely from the global north to the global south. In this study I
  • 24. 14 will be focusing on the second scenario, which involves the flow of FDI from countries with high levels of GDP to countries with low levels of GDP. The reason why I am choosing to focus on this direction of FDI is because the global north tends to be more powerful and thus can have more influence on cultures of less powerful countries through financial investments. Cultures of less powerful countries are at risk of disappearing as more dominant cultures are. One reason for this is that countries in of the global south are financially vulnerable and this renders it harder for them to reject FDI proposals. These countries often accept FDI because they are desperate for their economic conditions to improve, something which is often promised by foreign investors. Moreover, my decision to focus on FDI flows into global south is also statistically supported by the fact that this direction of FDI is the most common. In fact, the United Nations Conference on Trade and Development stated that in 2020 developing countries received over half of the total global FDI, with most of those investments going to less-developed countries in Asia and Oceania. FDI can significantly benefit developing countries, however it also bring costs that local governments may not be aware of. Positives and Negatives of FDI There are many reasons why FDI is seen as a positive phenomenon and why it is supported by organizations such as the United Nations (UN). FDI is seen as a powerful tool to help ‘developing countries’ grow economically by proving access to instruments and resources. This increased access to resources can increase employment rates in that
  • 25. 15 country. FDI can help a foreign country gain access to instruments and resources that enable the employment of more people of this country and improve the conditions of these work environments. Some elements that aid a country from an economic point of view include the investment into the construction of infrastructure (e.g., business buildings, schools, hospitals, etc.), the transportation system, power generation and distribution, provision of water and sanitation, and technological development (UNCTAD 2023). Regarding this last point, FDI investors can incorporate the latest technologies, operational practices, and financing tools into their foreign business. This can increase the efficiency of the business and reduce the influence of local governments have over them (Amadeo 2022). FDI can also help the people of a less economically developed country to build skills useful for their work performance in the business of interest. These skills can provide long-term help to the country because they can be applied to other jobs in the future, increasing the probability that the country will grow economically. Many economists and globalization supporters like to demonstrate through graphs how these forms of aid increase economic growth, which is assumed to be related to better living standards, in the country in which funds are inflowing. Empirical studies, like the types I just mentioned, finding a positive effect of FDI on growth include De Gregorio (1992), Zhang (2001), and Baldwin et al. (2005). The first two scholars examine positive spillover effects of FDI in the following countries, Latin America and China, respectively. FDI is also seen as a positive means through which a nation can grow economically and maintain social and political harmony. A specific case that come to mind is that of Malta. The Government of Malta introduced the legal notice 335 of 2017
  • 26. 16 (updated in 2020), denominated at The Grant of Citizenship for Exceptional Services Regulations, that creates routes to Maltese citizenship by virtue of exceptional services to the Republic of Malta (Mifsud 2022). This law allows the Minister to grant a certificate of naturalization as a citizen of Malta to an alien or stateless person if they provide some kind of humanitarian service which positively contributes to the well-being of Malta and its people. This service can come in many forms, some of which are: contributions by scientists, researchers, athletes, artists, cultural performers, investors, and entrepreneurs. To earn Maltese citizenship, a person must make a minimum investment in between €600,000 - €750,000 in addition to holding residency status in Malta for about 12-36 months. An alternative option to gain Maltese Citizenship is to donate a minimum of €10,000 to a registered philanthropic, cultural, sport, scientific, animal welfare, or artistic NGO or society. This is in addition to demonstrating connecting factors with Malta through personal, social, commercial, investment and philanthropic engagement with the host country Malta (Dr. Priscilla Mifsud 2022). This means that the Maltese Government is willing to give citizenship to people who were not born in the country nor have lived there for very long if the person makes a non-refundable large direct investment in the country or makes a substantial contribution to the Maltese society and culture. This is one of the cases in which FDI does not negatively impact culture, rather it might enhance the local culture and maybe even improve it. This is enabled by the Maltese government who encourages talented and wealthy foreigners to invest in the country both financially and intellectually. The expected outcome of these investments is the economic, social, political, intellectual, and cultural growth of Malta. Though this
  • 27. 17 may be true, it is important to remember that Malta’s culture today shares more values with ‘the West’, such as economic growth, scientific progress, technological development, diversity. Whereas a culture that varies drastically from this one and those of European countries may not benefit from FDI, specifically in regards to protection of culture, because their values may be drastically different. For instance, a culture that emphasizes worship of their local ancestors, like the Balinese culture, will probably not benefit from handing out citizenship to foreigner investors who neither understand nor follow ancestor worship because these foreigners would not practice their culture, hence contributing to its disappearance. Another positive attribute of FDI that economist scholars emphasize is that it increases GDP levels; examples of these scholars are De Gregorio (1992), Zhang (2001), and Baldwin et al. (2005). A problem with this statement is that GDP is assumed to be a good measure of living standards for all countries across the globe. This is partially accurate as more money in a country typically and ideally corresponds with the country having more essential needs such as water, food, shelter, healthcare, education, employment (Mills 2009). However, this theory does not consider wealth distribution and concentration which is necessary to observe whether the resources mentioned above are equally accessible to all social groups regardless of class (Mills 2009). In examining the concept of Gross Domestic Product (GDP), it becomes evident that this widely used economic metric primarily focuses on measuring the economic wealth of a community or country. However, historical evolution reveals that GDP emerged as a response to the need for a universal measure of wealth during times of
  • 28. 18 economic turbulence, such as the Great Depression and World War II (Mills 2009). This historical context provides insights into the limitations of GDP as it fails to consider the complex factors that contribute to overall well-being and quality of life, both on an individual and societal level, nor does it account for non-economic factors. Furthermore, GDP doesn't account for systemic inequality, and its correlation with individual happiness and access to essential resources is often tenuous. This critique underscores that GDP's economic lens doesn't fully capture the diverse and intricate elements of human existence. On a global scale, the one-size-fits-all approach of GDP seems tailored to the economic system and lifestyle of the United States. However, this alignment with Western consumer culture has led to the assimilation of foreign customs and the erosion of indigenous customs and values in other parts of the world. The result is a homogenization of culture that disregards the unique perspectives and values of various societies. This cultural erosion also obscures the importance of nature and its preservation, as highlighted by experts like Partha Dasgupta. Dasgupta's critique of GDP underscores that nature is invaluable and irreplaceable and attempts to assign monetary value to it are fundamentally flawed. As a result, there's a growing consensus that GDP is an unsustainable measure of living standards, and a shift towards alternative metrics is necessary, ones that account for the multifaceted nature of human existence and consider environmental sustainability as a vital component of true well-being. Additionally, GDP does not fully capture the complexity of humans’ existence and how our happiness depends on a multitude of elaborate phenomena, including social
  • 29. 19 relations, generational traditions of how to live life, culture, environmental preservation, and respect. In fact, in a study conducted by Diener and Tay (2013), GDP predicts life evaluations of people within a nation but does not account for the feelings people have regarding their personal income growth or decrement. A practical example of this can be found in three countries with high recent growth rates in GDP – China and Chile. “GDP per capita income has doubled in the last ten years and 18 years for China and Chile, respectively. Nevertheless, both nations report declining levels of life satisfaction” (Easterlin et al., 2010). This statement implies that GDP measures do not directly correlate with how happy people are. An alternative measure of happiness has been found by Thin, Neil, Ritu Verma, and Yukiko Uchida (2017) who argue that culture positively influences level of happiness and development. These authors define culture as a learning, knowledge and communication processes by which people collectively generate values, meanings, and identities. They analyze how culture is an essential factor in determining people’s levels of life satisfaction. They support this claim by explaining how culture is associated with people’s most treasured achievements, collective sense of belonging and sources of meaning. Moreover, they elaborate on the fact that though culture in itself is neither ‘good’ nor ‘bad’, there are elements of culture can be considered as such. There is an intrinsic value in the enjoyment of cultural practices and cultural sense of belonging. An example of an element which represents culture in this study is that of language. Language is associated with identity, history and belonging by facilitating communication and connectedness, which consequently effects happiness. Non-linguistic
  • 30. 20 forms of communication, such as body language, music, dance, and the embodiment of knowledge, are also significant in articulating culture and wellbeing. In conclusion, these authors argue that conceptions and valuations of happiness and the individual self are strongly influenced by culture (Thin, Neil, Ritu Verma, and Yukiko Uchida 2017). Why These Perspectives are Under-Researched Research concerning the effects of globalization on communities in the Global South has been centered on the positive effects it can have, often not accounting for the potential negative impacts alongside this. Even less has been researched and covered about the negative effects of FDI on the preservation of culture in countries of the global south. Because of the lack of research about this side of the story, there was minimal evidence to inform the preliminary assumptions of my research. Nevertheless, I believe that describing the perspectives in this study is necessary to ensure that more voices of exploited or marginalized communities are being heard. In order to increase the credibility of my study and its theoretical approach, I consider it necessary to discuss the motives behind why some information being used to support my argument is not well-documented. There is a lack of research about the negative effects of globalization, specifically FDI, on the preservation of culture. One reason regards the maintenance of the current global power structure. Powerful countries, which include the US, countries in the EU, and China, want to maintain their power status by perpetuating the expansion of the dominant narrative. The dominant narrative is presented as the best system through which societies should live, and capitalism is one of
  • 31. 21 the current dominant systems. This dominant systems of living and modes of thinking are an incredible example of human’s potential to create and progress. It possesses some positive characteristics and shouldn’t be shunned and obliterated. Rather it has the capability of creating great positive change in the world. At the same time, it is not the only system through which societies can and should live. Hence, it is important that other systems of living should also not be shunned or obliterated, as they also have traits that could be beneficial for the rest of the world to learn. Regardless of the negative attributes of other cultures, similarly to the capitalist system, every cultural system has positive qualities that other societies can learn from. To understand why the dominant ideologies and systems hinder other culture’s ideologies from being heard, which contributes to a lack of sources in my study, it is helpful to understand the root motivations of capitalism. According to the Cambridge Academic Content Dictionary, capitalism is an economic, political, and social system that is based on property, business, and industry being privately owned, and its central purpose is maximization of profit. Many structures through which the people in the U.S. live by have been created with this goal in mind. The authors Theodor W. Adorno and Max Horkheimer (1972) in their book Dialectic of Enlightenment discuss how for capitalism to work, things have been instrumentalized with the purpose of using them to make profit. In order to maximize profit, capitalism is based on a hierarchy of value of goods in which instrumentalized commodities must have a certain value. Under this framework, commodities can include goods and services, thereby making people’s time part of the value-hierarchy through the
  • 32. 22 production of these goods or value of their service. Since the purpose of capitalism is maximization of capital, people take actions to achieve this goal even if it comes at the expense of exploiting nature and other people whose skills and contributions are considered less valuable in the hierarchy. A byproduct of ‘the West’ quantifying the value of all things in a ranking order, is that some human beings or modes of living are not considered valuable. A principal example of something that capitalism does not consider to be inherently valuable is the preservation of nature, as it does not contribute towards creating profit unless its resources are extracted. Of course nature has many valuable resources that fuel capitalism, but the conservation and respect of nature, which could consist in limiting how much we exploit it, is not profitable in the short run, hence protecting it is not a priority. Similarly, capitalism allows for the exploitation and abuse of people as commodities, as protecting the conditions that allow them to survive and strive is not profitable in the short run. Therefore, capitalist systems do not prioritize the protection against exploitation so long as it results in maximized profit margins (Horkheimer and Adorno 1972). Capitalism is the most highly esteemed system in ‘the West’ and, because ‘the West’ is one of the most dominant and powerful forces that drive globalization, cultures that do not believe in the capitalist way of thinking are, at times, considered inferior. Though this thought is not always explicitly expressed by scholars in ‘the West’, it is often implied in their work, especially during the 19th and 20th centuries, in which the term ‘barbaric’ was used to describe a person or civilization that was considered ‘uncivilized’ (Lepeniez 2008).
  • 33. 23 Nevertheless, the motivation for the cultivation of knowledge is the same across the globe and amongst all cultural communities. This motivation is to understand our surroundings, interpret our existence and the origin of life, and create a system through which people can live their life with a sense of meaning. However, the methods of arranging society and understanding reality are different amongst societies based on the values they reflect, hence their cultures are different. Capitalist systems value the accumulation of capital and resources, which can easily be imposed across cultures regardless of their values as many already have economic systems that concern capital. This ability to be applied to a wide variety of cultures also leads to western thought being more valuable on a global scale as it promotes engagement in a capitalist global economic system. However, other cultures, for instance the Balinese culture, do not put the same emphasis on accumulation of wealth as the capitalist culture does. Therefore, cultures have their own understanding of what development is; it could be that a society aims to develops spiritually or to become more aware and interconnected with nature. As a result of this difference amongst cultures in defining development, knowledge from other cultures is considered not as valuable, hence there are limited efforts to preserve this cultural knowledge and to translate it into the dominant languages (e.g. English) (Robinson 2014). Consequently, these limited efforts for preservation of knowledge lead to a lack of engagement with these perspective in academic literature. Another factor that contributes to the lack of information about other non-western cultures is that these cultures often pass on knowledge orally through generations. Therefore, lack of written information and lack of translation of this information in the
  • 34. 24 dominant languages contributes to there being a lack of research regarding the interests of people belonging to these cultures and regarding their life perspectives. Moreover, if scholars from other countries do not have an education that is considered to meet the same standards of rigor as ‘the West’, then the knowledge they produce is not considered reputable and reliable. This lack of reliability is also a result of these non-western cultures often lacking an empirical dimension to organizing their knowledge. Additionally, if this information is not cited, produced, or translated in the very precise and constricting structure that ‘the West’ has created and considers reputable, then this information is unprofessional and unreliable in the western cannon. Another reason why there is a lack of research regarding the effects of FDI on culture is because culture is hard to define and measure. Culture is an agglomeration of attitudes, values, traditions, and actions which vary drastically among civilizations in the world. For this reason, it is hard to quantitatively measure and analyze from a scientific and economic lens. An argument made in a research that does not possess quantitative measures, is considered less trustworthy and reliable. Hence, it is easy to follow the mainstream tendencies of only studying things that can be measured through economic and scientific lenses with the hope of avoiding looking unprofessional. People are often driven by the fear of being ostracized from their community, and scientists or scholars who do not engage in the western standards of researchers must consider their reputation in academia when using “unreputable” sources (Noelle-Neumann 1993). All these facts contribute to lack of knowledge that the world has about less- powerful countries in the ‘global south’ and these western systems of living and
  • 35. 25 controlling other countries are designed and continue to allow some information to be considered more important and reliable than other information and cultural knowledge. This perpetuates uneven global exchange and dependence (good) and allows ‘the West’ to continue to prevail over other countries by taking advantage of them and being indifferent about the extinction of their cultures. It is for these reasons that I consider it very important to understand how cultures are being suppressed, changed and brought to extinction. By understanding what leads to cultures being less practiced, we can try to deconstruct the narratives we have been taking for granted and create a more fair world in which not only one culture is protected and spread, but in which each civilization can practice their own culture in peace without exploitation (and maybe even spread their knowledge to the world with the hope of creating a more equitable world and creating solutions to contemporary issues, such as learning to respect the earth and our connection to it). Hypothesis & Argument In this research I plan to fill the gap in the literary field about the negative effects of FDI on culture. Specifically, I hypothesize that FDI negatively affects the preservation of culture in countries in the Global South. Specifically, I support the claim that FDI renders it harder for people in the community in which the investment is being made to practice their culture. This can eventually lead to the extinction of the cultures belonging to countries who accept high levels of FDI. Consequently, I also support the claim that
  • 36. 26 countries who implement policies to limit FDI will have a greater ability to protect their culture. There are various theories that I envision and that I expect will support my hypotheses. I expect to validate these claims through the usage of literature, which is mentioned in the sections above, in addition to new sources relevant to these concepts. One claim I hope to support is that the more foreign investors own of a business in a country, the less power the locals will have to control the decision-making process regarding the ways the business is structured and conducted. A business investor’s decision-making power depends on how big of a percentage they own of the company because funds play an essential role in who can decide where the funds are distributed. Another theory from which I derive my hypothesis is that Foreign investment in the business of a country can lead to unfair competition between funded business and other businesses which are not funded by foreigners. I suppose that this might lead local business to go bankrupt and consequently stop producing their local traditional goods. This is a problem for culture because goods are a direct representation of culture as they are the physical portrayal of cultural skills, knowledge, and practices that have been passed on through generations. Moreover, young locals in the country in which FDI flows might learn the language of the foreign investors with the hope that their probability of getting employed by them is higher. Because of limited time, resources, and mental energy, learning the foreign language may come at the cost of not learning the local language or the specific
  • 37. 27 language of that person’s tribe. This would lead to the local languages and dialects to be less practiced, which eventually leads to language extinction. This is important because language is one of the most direct representations of culture. Related to this latest idea, I expect to support the theory that foreign investors bring along to the area in which they are investing their own values and ideologies belonging to their culture of origin. This influences the local culture. An example of this could be observed through the instillation of individualistic values by the foreign investor into the locals who are employed in the business which if being funded. For instance, local employees may be encouraged to excel in their work performance even at the cost of negatively affecting their other co-workers. In a country that believes in collectivistic values, this local employee may be contradicting their local culture because they want to maintain their job status at the business which is being funded by the foreign investor. Another example of cultural influence could be that the foreign investor may require work days to be Monday through Friday, without taking into account the local culture which might believe in not working on certain days to dedicate them to prayer, cultural celebration or ceremony, cultural holiday. This could lead to less participation in traditional events which could lead this culture being less practiced. Furthermore, I will provide evidence to support the claim that FDI from wealthy western countries to developing ones leads to environmental degradation. My reasoning for this is that foreign investors from countries, like the US and China, will bring over ideologies and business strategies that are based on profit maximization rather than respect for the land. Though there are some exceptions to this, I expect to find a
  • 38. 28 correlation (or causal relationship?) between FDI and less strict ethics and policies that protect the environment. This might be the case because the culture in which the foreigner is investing adapts to the requests of the investor which are focused around profit maximization. Because many cultures, like the Buddhist ones, are based on respect for nature, harm to the environment also means harm to the practice of these cultures. In regards to my second hypothesis, I support the claim that countries who implement policies to limit FDI will have a greater ability to protect their culture. The reason for this is governments who take measures to set limitations on the sectors in which foreigners can invest, how much they can invest, and in what circumstances will have more control over the businesses in their country. Having control over the businesses of a country is important because these are central to the economy and cause a serious of chain-reactions that are not only in the work environment of a country. The way in which businesses are conducted and the systems they have in place are important because they determine who may get employed, salaries, and working conditions. Also, the availability of certain jobs changes the intentions of locals in regards to what skills they may aim to acquire and what academic paths they should follow. Hence, in a way, the types of jobs available shape the intentions and actions of the nation. Moreover, the ways in which businesses are conducted affect not only the people employed, but also their families and the environment. Systems that consider the broad picture of how they are affecting a society and that take into account the wellbeing of its people and environment, will likely have more positive effects and be sensitive to the preservation of culture. This could mean that businesses in which locals have most of the decision-
  • 39. 29 making power, will execute their business in a way that is respectful to the locals and their culture. Conversely, businesses in which the foreign investor has most of the decision-making power, may prioritize the wellbeing of the foreign investor and this may not correspond with the wellbeing of the locals and their culture. Therefore, I aim to support the claim that countries who set boundaries on how foreigners can invest in businesses in their country, are better able to organize the business in a way that is beneficial to the well-being of locals. As supported in the section about the importance of culture, the well-being of a society is highly dependent on its culture. Hence, policies that set rules on how foreign investments can occur, are more likely to preserve their culture, either by taking action to protect it, or by prohibiting business transactions and systems that are detrimental to the local culture.
  • 40. 30 Methodology For the purpose of examining the effects of foreign direct investment (FDI) on preservation of culture in countries in the global south I will conduct a cross-sectional comparative case study analysis utilizing methods of difference. Before beginning analysis, I will explain why I chose this method and why the selected cases provide the circumstances necessary for this methodology. Cases were selected on the basis of available government information for each country as well as the amount of research that has been conducted in that country. The availability of information and research in my countries of choice is important to ensure validity in my research. The case selection processes will be described for each country selected for analysis. Then the key variables of my analysis, FDI, culture, and policies that limit FDI, will be defined and explained in relation to how they can be qualitatively identified. Foremost, I chose to utilize two cross-sectional case studies by implementing the methods of difference approach because there is a complex relationship between my independent variable (FDI) and dependent variable (culture). While FDI can be easily quantitatively analyzed, culture may have some elements that are quantitative, like architecture or meal preference, but is largely a subjective experience of a place’s history, customs, and values. This is one of the main reasons why this relationship is complex: culture is hard to define, identify and measure quantitatively. Hence, it is very difficult, if not impossible, to find precise data and numbers to fully represent culture and how FDI affects its preservation. Therefore, it is more possible to analyze differences in the ability
  • 41. 31 of two countries to preserve their culture if these two countries have many other demographic characteristics in common. By controlling for these factors, the only main and evident measurable difference amongst them is how much FDI they accept. For this method to work, I must choose two countries that have a set of characteristics in common. These characteristics include geographic location, religion and culture, participation in the global economy, and population size. Ideally these features should be equal, but because no two countries are exactly the same, for the purpose of this study I will consider it sufficient if these features are substantially similar. Geographic location ensures that countries are in the same global region, and thus are facing similar pressures in a global economy. Once cases with the necessary similarities are selected, their openness to receiving FDI will be the remaining factor to explain differences between the countries. One country will be very enthusiastic to invite as much FDI as possible, by taking down barriers that might discourage investors from investing in this country, or by allowing the foreign investors to reap large benefits from FDI deals. However, the other country will be more hesitant to receiving FDI, will have policies in place to limit the inflow of FDI and might also have policies related to these that are intended to protect and preserve their culture. Once these features are selected, the analysis can begin. Why These Cases Make Good Comparisons The cases that I have selected to examine are Thailand and Cambodia. I have chosen these two cases because, in 2021, in Thailand, FDI constituted 9.9% of the gross
  • 42. 32 fixed capital formation, while in Cambodia FDI constituted 56.1% of the gross fixed capital formation (UNCTAD 2022). This wide divergence in percentage of dependency on FDI, noticeable in Figure 1, creates a good basis of comparison to determine the effect of FDI on preservation of culture. Another major difference between these two countries can be noticed in open versus closed they are with their FDI policies. In Figure 2 it can be noticed that based on the FDI Regulatory Restrictiveness Index Cambodia ranks below 0.10, meaning it is very open, and is slightly below the Organization for Economic Co- Operation and Development (OECD) average in this index. Conversely, Thailand ranks slightly below 0.30 in this Index, meaning it is more open. In fact, Thailand is above both the OECD and non-OECD average, meaning that it is significantly more closed in this index compared to many countries, not only Cambodia.
  • 43. 33 Figure 1 Foreign Direct Investment Inflows as a Ratio to Gross Fixed Capital Formation, 2022. (percentage) Source: UNCTAD, 2022. Figure 2 FDI Regulatory Restrictiveness Index, 2019 (open = 0, closed = 1). Source: OECD based on the OECD FDI Regulatory Restrictiveness Index methodology.
  • 44. 34 While Thailand and Cambodia differ greatly on their dependence on FDI, they have many characteristics in common or that are at least relatively comparable. These are their region in the world (Southeast Asia), geographical landscape, and shared border. Simultaneously, they share an extremely similar culture compared to the other cultures of this region. In fact, they both share the same historical roots dating back to the expansion of the Khmer domain during the 9th and 13th century (Britannica). This civilization was inspired by Indian and Hindu culture, which consequently spread to Thailand and Cambodia. Because of this, the languages of these two countries share the same Mon- Khmer roots (Britannica). They share the same national mantra of “nation-religion-king”, as well as social norms, culinary traditions, literature, dramatic arts, and other socio- ethnic features. Examples of cultural activities that both societies practice are kickboxing, called Muaythai in Thailand and Kun Khmer in Cambodia, and Apsara dancing. Finally, both countries are predominantly Theravada Buddhist, with 93 percent of Thai people and 95 percent of Cambodians professing this faith (Rim 2023). Moreover, Thailand and Cambodia are both active participants in the global economy. A factor that can determine a country’s connectedness with other countries around the world is trade. Trade is the sum of exports and imports of goods and services measured as a share of gross domestic product. In the image below, the World Bank (2022) gathered data regarding the trade tendencies and numbers between Thailand and Cambodia, which we can observe in Figure 3 as being very similar.
  • 45. 35 The population of these countries is also comparable though is not the same. According to the United Nations Population Division and the World Bank, in 2022, Thailand had almost 72 million inhabitants, whereas Cambodia had almost 17 million inhabitants. Though this difference is present, the population sizes of these two countries are still similar compared to other countries in the South-East Asian region (e.g. Indonesia: 275 million inhabitants, Philippines: 115 million inhabitants, Laos: 7 million inhabitants). Furthermore, these two countries are so similar in other aspects, specifically pertaining to culture and international involvement, that the difference in population is not as important in the context of this comparison. The shared religion, culture, geographical region, international engagement and the difference in FDI constitute the control variables. These variables allowed me to more Figure 3 Trade (% of GDP) – Cambodia, Thailand. Source: World Bank, 2022.
  • 46. 36 easily determine the likeliness that the quantity of FDI inflows is the factor that causes a negative effect on the preservation of culture in Thailand and Cambodia. Independent Variable The independent variable in this study is FDI. The FDI considered in this study will be that of ownership stakes of foreign investors, companies, or governments in Thai or Cambodian companies or projects. The data used in this study to measure FDI inflowing into Thailand and Cambodia is gathered from widely accessible sources including the World Bank and UNCTAD. The figures 4 and 6 below show the quantity of FDI inflows, measured in current US$ billions, between 1970 and 2022, respectively in Thailand and in Cambodia (World Bank 2022). It can be noticed how the quantity of FDI into Thailand grew a great amount between 1990 and 2000. The next big jump can be seen in 2010, after which the quantity of FDI inflows varied drastically in the range of 16 billion to -5 billion. It is possible that these large swings were caused by the Thai government testing the implementation of new FDI policies during this time, as well as by external influences (e.g. the 2008 financial crisis, COVID-19). The percentage that FDI composes of Thailand’s GDP, observable in Figure 5, has also varied drastically over time. The precise reasons are unclear and beyond the scope of my research.
  • 47. 37 Figure 4 Foreign Direct Investment, Net Inflows (BoP, current US$) – Thailand, (in billions). Source: “International Monetary Fund, Balance of Payments database, supplemented by data from the United Nations Conference on Trade and Development and official national sources” as cited by World Bank, 2022.
  • 48. 38 On the other hand, in Cambodia, starting from the beginning of the 21st century, a steep increase in amount of FDI inflows can be noticed in Figure 6. After 2005, FDI numbers grew somewhat consistenly through 2022. This scenario is different from that of Thailand as Cambodia’s FDI numbers did not continuously change, rather they grew with a steady momentum. Figure 5 Foreign Direct Investment, Net Inflows (% of GDP) – Thailand. Source: “International Monetary Fund, International Financial Statistics and Balance of Payments databases, World Bank, International Statistics, and World Bank and OECD GDP estimates” as cited in World Bank, 2022.
  • 49. 39 While these numbers show that there is a higher quantity of FDI flowing into Thailand compared to Cambodia, we must take into account gross fixed capital formation and population size. The percentage of gross fixed capital formation that FDI consitutes is higher in Cambodia than in Thailand. In other words, Cambodia’s economy depends more on FDI than Thailand’s does. This difference in percentage which FDI composes of the GDP of these two countries can be noticed in Figure 5 and Figure 7. Figure 6 Foreign Direct Investment, Net Inflows (BoP, current US$) – Cambodia, (in billions). Source: “International Monetary Fund, Balance of Payments database, supplemented by data from the United Nations Conference on Trade and Development and official national sources” as cited by World Bank, 2022.
  • 50. 40 Dependent Variable As explained previously, culture is a complex phenomenon constituted of many elements. For this reason, I measured culture in a multitude of ways, using both qualitative and quantitative evidence, drawing from a variety of sources, such as books, newspaper articles, journal articles, international organization websites, Non-Profit websites, government websites, journalist blogs, local people’s personal blogs, and Figure 7 Foreign Direct Investment, Net Inflows (% of GDP) – Cambodia. Source: “International Monetary Fund, International Financial Statistics and Balance of Payments databases, World Bank, International Statistics, and World Bank and OECD GDP estimates” as cited in World Bank, 2022.
  • 51. 41 interviews. I used methods of difference to show that FDI is the agent which is causing the difference in the ability of Thailand and Cambodia to protect their culture. The first section “Qualitative Evidence” provides details regarding the sources used and then explains what elements were used to represent culture. Here, culture was measured by observing the ability of locals to continue their traditional work, of the ability of locals to continue living in their town versus needing to migrate to find a different job, and of the importance attributed to Muaythai and Kun Khmer boxing. The second section “Quantitative Evidence” does the same, but here culture was measured by evaluating the change over time of the quantity of people who speak the local languages versus the official language, of the attitudes of locals from collectivist to individualist, of their change in priorities, and of levels of religiosity. Additional data regarding Thais and Cambodians’ opinions about external influences on their country are included as they are useful towards gaining a fuller picture of the situation, though they don’t directly prove my hypothesis.. Qualitative Evidence The first section of my findings is qualitative and mostly based on the article “Is foreign investment truly a force for good?” written by Zafirah Mohamed Zein (2021) in collaboration with “Open Development Cambodia” and published in the “Kontinentalist”. Open Development Cambodia (ODC) is an NGO open data webpage that provides information about Cambodia and its social and economic development. This organization values uncensored transmission of information to all members of society with no
  • 52. 42 restrictions and transparency. ODC claims that they “[do] not promote any particular perspective, agenda or bias other than to provide objective information about Cambodia and its development” (2021). Kontinentalist is a creative data webpage that aims to “bridge the gap between research and the public” by extracting meaning out of cold data and by providing more context to the information that is examined. This organization uses an interdisciplinary approach in their data storytelling and values bringing light to unheard voices, as well as being transparent regarding where they get their information. This organization was founded by Lee Han Shih (Hans), a Singaporean journalist who was a civil servant, a professor and long-time correspondent with the Business Times. Zein’s article in the Kontinentalist (2021) draws his information from Open Development Cambodia, the U.S. Department of State, the China Dialogue, the National Institute for Defense Studies, interviews conducted by the Cambodian Center for Independent Media, and others. This wide variety of sources ensures us that the story Zein narrates about what foreign investors are doing to villages in Cambodia, is well supported. Moreover, to discuss how tourism is affecting these two countries, I drew data from the United Nations Development Program (UNDP), the UN agency responsible for international development; Thailand Policy Lab Team, a policy innovation lab run established by the UNDP; The Diplomat, an Asia-Pacific magazine that focuses on geopolitics, defense, economics, social, and environmental issues; research from the EHL
  • 53. 43 Hospitality Business School, the world’s leading hospitality University in Switzerland; and the Kontinentalist. Information regarding land concessions was used from the China Dialogue, an independent, non-profit organization dedicated to promoting a common understanding of China’s environmental challenges. Transitioning into the details about the operationalization of culture and its preservation, the ability of locals to continue their traditional work was examined. This was used as a means through which I could measure culture because traditional practices are an important element of culture. In many civilizations people can financially support themselves and their families through their cultural practices. For instance, in Bali many people make a living by selling religious offerings at the market. These offerings represent a gift that humans give to the gods to show their gratitude in their regards and are made from natural materials such as banana leaves, flowers, rice, fruit, and incense. To a foreigner, these offerings might seem to have no value, but for the Balinese people they are essential for religious ceremonies, hence they provide other Balinese with a stipend by buying their offerings. If the value attributed to cultural things, like the Balinese offerings, were to decrease (because of external influences), then locals might not be able to support themselves by continuing these traditional practices and might have to abandon them to find another job that does not possess cultural meaning. Moreover, if Chinese foreigners in Cambodia were to overfish utilizing industrial means and pollute the water in the rivers where local Cambodians have fished for centuries, this might push the locals to migrate elsewhere abandoning their traditional fishing practice to find a different non cultural job elsewhere. Additional context is provided regarding the
  • 54. 44 ways in which unregulated tourism effects the ability of locals to continue their traditional practices. Another way I assessed change in culture was through how much importance is attributed to the art of boxing, which represents an essential part of both the Thai and Cambodian cultures. These martial arts of “Kun Khmer” in Cambodia, and it’s semi- equivalent “Muay Thai” in Thailand emphasize the use of punches, kicks, elbows, and knees during combat with the opponent. Before the fight, a traditional dance, accompanied by traditional music, is performed to honor the fighters’ teachers and ancestors. This shows how Kun Khmer and Muay Thai are not only combat sports and sources of national pride, but also rituals that are deeply entrenched in the cultures and histories of these people (Wheaton 2023). Hence, I compared the wealth of boxers in these two countries to determine how much importance is attributed to their art, which indicates how well this aspect of culture has been maintained. Quantitative Evidence The second section of my findings is based on data provided by the Asian Barometer Survey (ABS) is a renowned organization funded in 1971 by the National Taiwan University that collects public opinion data on issues such as political values, democracy, governance, human security, and economic reforms. It is recognized by the International Social Science Council of UNESCO. Moreover, the Oxford Handbook of Comparative Politics has listed the ABS as an important global research project in the political science field. ABS uses a randomized method for selecting sampling units and it
  • 55. 45 does this by using census household lists or a multistage area approach. By doing so ABS hopes to represent the totality of the adult, voting-age population in each country surveyed. ABS is able to justify its representation of the entire adult community of a country in South-East Asia because of the many steps involved in creating and conducting the surveys. These steps include intensive training of fieldworkers who pass through intensive, week-long training programs to familiarize themselves with the Asian Barometer research instrument, the ABS sampling methods, and the cultural and ethical context of interviews. Face-to-face interviews are conducted in the respondent’s homes or workplaces in the language of the respondent’s choice. Local language translations are prepared with the goal of accommodating every language group whose members constitute at least 5 percent of the population. To check for accuracy, the local language versions are screened through blind back-translation by a different translator and any discrepancies are corrected. Moreover, ABS requires that all interview teams travel together under the direction of a field supervisor. Finally, quality checks are enforced at every stage of data conversion to ensure that information from paper returns is edited, coded, and entered correctly for purposes of computer analysis. In the Asian Barometer, responses regarding language are utilized to measure the ability of the countries of interest to preserve their culture. Language is one of the most noticeable aspects of a culture and the quantity of people who speak it and the frequency at which it is spoken can represent a good indicator of how much the culture belonging to that language is practiced. The question from the Asian Barometer that was utilized in
  • 56. 46 this study for this purpose was that pertaining to how much Thai and Cambodian respondents speak their local language versus the official state language. How much respondents demonstrated to believe in individualist versus collectivist attitudes was also observed. The ‘Western’ world typically follows individualistic values, which promote one’s own wellbeing over that of others, while the ‘Eastern’ world typically follows collectivistic values, which promote the wellbeing of the community over that of the individual. Questions from the Asian Barometer were useful to observe people’s attitudes in Thailand and Cambodia regarding these values. I argue that it is possible that Cambodia, who accepts more FDI than Thailand, might have more individualistic values because of greater foreign influence. Because Cambodia is traditionally a collectivistic country, changes in the ethics regarding an individual and their role in the community could indicate a change in Cambodian culture. The Asian Barometer asks very relevant questions of attitudes regarding individualistic and collectivistic beliefs and values. Respondents are asked to state how strongly they agree with the following statements: In a group, we should sacrifice our individual interest for the sake of the group’s collective interest; For the sake of the national interest, individual interest could be sacrificed. Additionally, survey responses regarding what priorities Thais and Cambodians had across the different survey waves were considered. Respondents were asked to choose between protecting the environment as a given priority, and economic wealth and creating jobs as a top priority. An option allowing the respondents to remain undecided was also provided. Care for the environment is an important indicator of cultural
  • 57. 47 preservation because Thailand and Cambodia’s religion, Theravada Buddhism, promotes respect for the environment (see more in the section “Thailand culture”). Responses regarding levels of religiosity amongst Thais and Cambodians were examined as religion plays a central role in both of these cultures. Respondents were provided a scale to determine how religious they considered themselves to be. Insights from Thais and Cambodians regarding their opinions on globalization are also useful to understand in further depth the ideological environment in these countries. The Asian Barometer asks its respondents how strongly they agree or disagree with the statements: “Our country should defend our way of life instead of becoming more and more like other countries”, “If people have too many different ways of thinking, society will be chaotic” and “We should protect our farmers and workers by limiting the import of foreign goods” (Asian Barometer). These responses are important to understand what locals think about external influences, such as different and foreign ways of living and thinking, have on their country. Moreover, it is useful to know whether locals believe that foreign goods are hurting the local workers and farmers, as foreign goods often come with foreign investment, unless a country specifically requires foreign investors to only source the resources necessary for their business from inside the country. Finally, the survey “What do Cambodians Think?” by Konrad-Adenauer-Stiftung (KAS) and Spear Insights, was used to determine their quality of life and to provide data regarding their belief that the environment is one of the country’s most pressing issues. KAS is an association committed to achieving global peace and freedom through political
  • 58. 48 education, founded by Christian Democratic Union of Germany (CDU). Spear Insights is a research and consultancy agency founded in 2020 in Cambodia with the purpose of providing the public with data about the development of Southeast Asia.
  • 59. 49 Thailand History Prior to 1939, Thailand was called “Siam” (Britannica). In contrast with Cambodia and many other countries in South-East Asia, Thailand was never colonized by European powers. Rather, independent Siam was ruled by an absolute monarchy till the Siamese revolution in 1932. This revolution was a bloodless coup that marked a turning point in Thai history. This coup ended seven centuries of absolute monarchy and established a constitutional monarchy (TheStraitsTimes). Thereafter, Thailand got its first constitution, paving the way for social and political reforms. The constitution following this coup required elected parliaments and there has been growing support for a parliamentary democracy throughout the 20th and 21st centuries (Britannica). The most interesting part of Thai history in relation to my research is that it has never been colonized. The absence of colonization in Thailand is a peculiarity in South East Asia because all countries in this region have experienced foreign dominance at some point in time. For instance, Cambodia was colonized by the French, who integrated the country into its protectorate called “French Indochina” for 90 years (1863-1953) and by the Japanese during World War II (1941-1945) (BBC News). One possible explanation for why the Thais are able to practice and protect their culture so well is because it has remained untouched from foreign dominance and influence. Additionally, the Thai government has come up with many laws to limit FDI and regulate the ways in which it is used because they want to protect the best interest of their people, which includes
  • 60. 50 preserving their culture. Though it is not certain that the desire to protect Thai culture was the primary motivating factor for the creation of laws to control FDI inflows, I argue that the creation of these laws better enables Thailand to protect their culture. Economic Status and International Engagement Thailand was one of the world’s fastest growing economies before the Asian Financial Crisis in 1997 (OECD 2022). Thailand then recovered from this crisis and its economy has been growing moderately since the beginning of the 21st century. Thailand then suffered from a recession following 2020 due to the Covid-19 outbreak. This caused Thailand’s economic growth to come to a halt and the government has been trying to recover ever since. Regardless of these struggles, according to the Worldometer, whose information is taken from the World Bank, in 2022 Thailand ranked as the 29th highest GDP in the world. Furthermore, Thailand is very engaged with the global economy as trade composes about 135% of Thailand’s GDP (World Bank 2022). Stance on FDI Thailand historically has done very well at attracting FDI. Inward FDI has been an important driver of economic growth since 2000. FDI stocks as a share of GDP increased to 50% by 2017, which is considerably higher than the Association of Southeast Asian Nations (ASEAN) average (excluding Singapore). Thailand is the third major FDI destination in ASEAN, marginally behind Indonesia (OECD Investment Policy Reviews Thailand). Japan, the United States and Singapore account for more than 60% of total inward FDI in Thailand. Singapore is by far the largest investor from ASEAN as it
  • 61. 51 accounts for almost 80% of total FDI stocks coming into Thailand. More recently, FDI from other countries such as China, Canada and Germany have increased as well. (OECD). Thailand continues to encourage investment from all the countries mentioned above but it also seeks to avoid dependence on any one country as a source of investment (US Department of State). Though Thailand was one of the first countries to recognize the powerful role that foreign investors could play in fueling export-led growth, and was quick in opening up to foreign investment, it did so selectively and with caution (OECD 2022). In contrast to many other emerging economies, Thailand has not backtracked on those early FDI liberalization efforts, nor has there been much further liberalization since Figure 8 FDI Regulatory Restrictiveness Index, by sector: Thailand vs, ASEAN vs. OECD, 2019 Source: OECD 2022.
  • 62. 52 then. Over time, other ASEAN Member States have caught up and even surpassed Thailand in terms of openness to FDI, as can be noticed in Figure 8. This figure shows how FDI restrictiveness varies among industries in Thailand, as well as in ASEAN and Organization for Economic Co-Operation and Development (OECD) member countries. Compared to the member countries of these organizations, Thailand generally ranks. higher on the FDI Regulatory Restrictiveness Index in most industries. As a result, Thailand is no longer attracting FDI as it used to (OECD 2022). The Foreign Business Act These laws that limit the amount of FDI inflow and control the distribution of FDI among industries, as well as the ways in which investors can conduct business in Thailand, can be found in the “Foreign Business Act, B.E. 2542 (1999)” (FBA). This act was created and passed by the Thai King Bhumibol Adulyadej, with the help of the National Assembly (Investment Policy Hub). Section five states that this act considers various benefits and threats that FDI poses on Thailand’s wellbeing and prosperity. Specifically, in this section, it is stated that “In granting permission to foreigners for the operation of businesses under this Act, regard shall be had to advantageous and disadvantageous effects on national safety and security, economic and social development of the country, public order or good morals, national values in arts, culture, traditions and customs, natural resources conservation, energy, environmental preservation, consumer protection, sizes of undertakings, employment, technology transfer and research and development” (Investment Policy Hub). This act demonstrates the rigor with which
  • 63. 53 Thailand creates its restrictive FDI policies and the amount of thought that was put into them. The act continues by explaining who is not eligible for operating a business in Thailand. People who are not eligible for this are those who have been deported and foreigners who are staying in the country without permission. Those whose nationality has been revoked or foreigners who were born in the Kingdom without having official Thai nationality must obtain a license from the Director-General and may operate only such businesses, and in such localities, as prescribed in the Notification issued by the Minister with the approval of the Council of Ministers and published in the Government Gazette. This extremely detailed description of who is allowed to invest in Thailand’s businesses is interesting to note because it reflects how much the Thais care about who they let conduct business in their country, as well as the ways in which foreign business is conducted and the effects of FDI on the wellbeing of the people and environment of Thailand. Section 8 of this act declares that “no foreigner may operate such businesses in respect of which Thai nationals are not yet ready to compete with foreigners, unless upon obtaining permission from the Director-General with the approval of the Commission” (FBA). This is another example of how detailed the FDI limitations are and how carefully the Thai government tailors business opportunities to the wellbeing of their local workers and businesses over that of foreign ones. Moreover, the Thai government has taken into account how important it is for locals to own a large percentage of businesses funded by foreigners in Thailand because this directly correlates with how much power the local
  • 64. 54 Thai people have in the logistics of business execution and decision-making processes. In fact, section 15 states that “A foreigner which is a juristic person may operate any business specified in List Two only where not less than forty percent of its shares are held by Thai nationals or juristic persons which are not foreigners under this Act” (Investment Policy Hub). The law is set up so that Thai people will benefit economically from any foreign business in the country. The following paragraphs address how the FBA restricts businesses for foreigners. Foreigners, considered as non-nationals, are prohibited from engaging in activities that have the potential of affecting national safety or security, arts and culture, traditional industries, folk handicrafts, natural resources, and the environment. These activities include “newspaper and radio broadcasting stations and businesses; agricultural businesses; forestry and timber processing from a natural forest; fishery in Thai territorial waters and specific economic zones; extraction of Thai medicinal herbs; trading and auctioning of antique objects or objects of historical value from Thailand; making or casting of Buddha images and monk alms bowls; and land trading” (FBA). This section of the Foreign Business Act prevents foreigners from working and investing in sectors that have cultural significance, consequently serving to protect local culture. There are also restrictions on foreigners becoming involved in tourism-related businesses that indirectly affect the local culture: “hotels; guided touring; selling food and beverages; and other service-sector businesses” (FBA). Thailand’s long detailed list of rules regarding the capabilities and limitations of foreign investors has attempted to limit the negative impacts of FDI on local culture.