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Foreign Direct Investment (FDI) and
Global Value Chains (GVCs)
Pavida Pananond
pavida@tbs.tu.ac.th
Thammasat Business School
Malaysia Futures 2023
LSE-SEAC and Khazanah Research Institute
31 May 2023
SEA and GVC 1.0 SEA and GVC 1.5
Economic context - Globalisation of trade, investment
and production networks
- Rising protectionism
- Rethinking global value chains
Strategic Importance
of Southeast Asia
- Factory Asia - Factory AND market Asia
- Location for China plus x
Nature of FDI - Inward FDI - Outward FDI and intra-regional FDI
Strategic Directions of
multinational
enterprises (MNEs)
- ‘Made-here-sold-there’
- Efficiency (cost) –driven offshoring
of production
- Dispersion of GVC activities
- ‘Made-here-sold-here’
- ”Resilience”-driven diversification
- Shortening and regionalisation of
GVC distances
GVC policy challenges - Export promotion
- FDI attraction
- Cost control
- Not just one pattern of GVCs
- Resilience for whom?:
- Country-level: Security
- GVC-level: governance
effectiveness
- Firm-level: MNEs vs subsidiaries
Southeast Asia and GVCs
Key Takeaways
• Globalisation is not linear: How countries in Asia
adjust from being part of global value chains to regional
value chains amidst the changing context of globalisation
• Global value chain resilience is not one dimensional:
How countries, industries, and firms leverage their
positions in current context (e.g., regional head quarters,
gateway to sub-regional markets, new hubs of strategic natural
resources)
• Global value chain resilience are not only about lead
firms and their home countries: Supplier firms in
emerging markets also need to adjust

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Session 1 - Economic Futures_Prof Pavida

  • 1. Foreign Direct Investment (FDI) and Global Value Chains (GVCs) Pavida Pananond pavida@tbs.tu.ac.th Thammasat Business School Malaysia Futures 2023 LSE-SEAC and Khazanah Research Institute 31 May 2023
  • 2. SEA and GVC 1.0 SEA and GVC 1.5 Economic context - Globalisation of trade, investment and production networks - Rising protectionism - Rethinking global value chains Strategic Importance of Southeast Asia - Factory Asia - Factory AND market Asia - Location for China plus x Nature of FDI - Inward FDI - Outward FDI and intra-regional FDI Strategic Directions of multinational enterprises (MNEs) - ‘Made-here-sold-there’ - Efficiency (cost) –driven offshoring of production - Dispersion of GVC activities - ‘Made-here-sold-here’ - ”Resilience”-driven diversification - Shortening and regionalisation of GVC distances GVC policy challenges - Export promotion - FDI attraction - Cost control - Not just one pattern of GVCs - Resilience for whom?: - Country-level: Security - GVC-level: governance effectiveness - Firm-level: MNEs vs subsidiaries Southeast Asia and GVCs
  • 3. Key Takeaways • Globalisation is not linear: How countries in Asia adjust from being part of global value chains to regional value chains amidst the changing context of globalisation • Global value chain resilience is not one dimensional: How countries, industries, and firms leverage their positions in current context (e.g., regional head quarters, gateway to sub-regional markets, new hubs of strategic natural resources) • Global value chain resilience are not only about lead firms and their home countries: Supplier firms in emerging markets also need to adjust