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The political economy of the asean free trade area (afta)

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No. 31 

Attempting Developmental 

 Regionalism Through AFTA: 

The Domestic Politics – Domestic Capital Nexus 

 

Helen E S Nesadurai 

 

 

 

 

Institute of Defence and Strategic Studies 

Singapore 

 

 

AUGUST 2002 

 

 

 

 

With Compliments 

 

 

 

 

 

 

This Working Paper series presents papers in a preliminary form and serves to stimulate 

comment and discussion.  The views expressed are entirely the author’s own and not that of 

the Institute of Defence and Strategic Studies. 



The Institute of Defence and Strategic Studies (IDSS)

 was established in July 1996 as an 

autonomous research institute within the Nanyang Technological University.  Its objectives are to: 

Conduct research on security, strategic and international issues. 

Provide general and graduate education in strategic studies, international relations, defence 

management and defence technology. 

Promote joint and exchange programmes with similar regional and international institutions; 

organise seminars/conferences on topics salient to the strategic and policy communities of the 

Asia-Pacific. 

   

Research 

Through its Working Paper Series, IDSS Commentaries and other publications, the Institute seeks 

to share its research findings with the strategic studies and defence policy communities.  The 

Institute’s researchers are also encouraged to publish their writings in refereed journals.  The focus 

of research is on issues relating to the security and stability of the Asia-Pacific region and their 

implications for Singapore and other countries in the region.  A Chaired Professorship, the S. 

Rajaratnam Professorship in Strategic Studies (named after Singapore’s first Foreign Minister), has 

been established to bring distinguished scholars to participate in the work of the Institute.  Previous 

holders of the Chair include Professor Stephen Walt (Evron M. and Jeane J. Kirkpatrick Professor 

of International Affairs, John F. Kennedy School of Government, Harvard University, USA), 

Professor Jack Snyder (Robert and Renee Belfer Professor of International Relations, Institute of 

War and Peace Studies, Political Science Department, Columbia University) and Professor Wang 

Jisi (Senior Researcher and Director, Institute of American Studies, Chinese Academy of Social 

Sciences).  A Visiting Research Fellow Programme also enables overseas scholars to carry out 

related research in the Institute. 

 

 

Teaching 

The Institute provides educational opportunities at an advanced level to professionals from both 

the private and public sectors in Singapore and overseas through the Master of Science in Strategic 

Studies and Master of Science in International Relations programmes.  These are full-time courses 

conducted by an international faculty from July - June each year.  The Institute also offers PhD 

programmes in Strategic Studies and International Relations.  Besides the graduate programmes, 

the Institute conducts courses on geopolitics and regional issues at the SAFTI Military Institute 

(Officer Cadet School, Advanced Officers’ School and the Singapore Command and Staff 

College), the SAF Warrant Officers’ School, as well as the Defence and Foreign Ministries.  The 

Institute also runs a one-semester course on The International Relations of the Asia Pacific for 

undergraduates in NTU. 

 

 

Networking 

The Institute convenes workshops, seminars and colloquia on aspects of international relations and 

security development which are of contemporary and historical significance.  Highlights of the 

Institute’s activities include a regular Colloquium on Strategic Trends in the 21

st

 Century, the 

annual Asia Pacific Programme for Senior Military Officers and the biennial Asia Pacific Security 

Conference (held in conjunction with Asian Aerospace).  Institute staff participate in Track II 

security dialogues and scholarly conferences in the Asia-Pacific.  The Institute has contacts and 

collaborations with many think-tanks and research institutes in Asia, Europe and the United States.  

The Institute has also participated in research projects funded by the Ford Foundation and the 

Sasakawa Peace Foundation.  The Institute also serves as the Secretariat for the Council for 

Security Cooperation in the Asia- Pacific, (CSCAP) Singapore.  Through these activities, the 

Institute aims to develop and nurture a network of researchers whose collaborative efforts will 

yield new insights into security issues of interest to Singapore and the region.   



ABSTRACT 

 

The relationship of regionalism to globalisation is modelled in the literature either as open 

regionalism aimed at integration with the global market or as a project of resistance to 

global market forces.  Neither of these ideal-type models adequately accounts for an 

empirical puzzle associated with the ASEAN Free Trade Area (AFTA).  Although AFTA 

is acknowledged as a project of open regionalism aimed at attracting FDI to the Southeast 

Asian region, its members surprisingly chose to accord foreign investors full market 

access and national treatment privileges at least ten years later than to ASEAN national 

investors in AFTA’s investment liberalisation component programme.  How do we 

explain this seeming contradiction?  By making a conceptual distinction between foreign-

owned and domestic-owned capital, a distinction that is particularly salient in the 

Southeast Asian context where domestic-owned, often ‘emerging’ capital performs vital 

social/political roles and whose survival is crucial in sustaining elite rule, this paper 

advances a third model of the globalisation-regionalism relationship.  Developmental 

regionalism, which draws on strategic trade theory from the International Economics 

discipline, describes an approach to regionalism in which an initial period of partial and 

temporary resistance to global competition is employed to build up domestic firms able to 

eventually engage in global competition.  In particular, it was to preserve domestic 

businesses that were closely allied with members of the political/ruling elite that led 

certain member governments in ASEAN to advocate a developmental role for AFTA 

through its investment liberalisation programme, while still using the regional tariff 

liberalisation component programme as the ‘carrot’ to attract FDI. 

 

 

 

 

 

 

 

 

 

 

************* 

 

   

 

 

Dr Helen E S Nesadurai is Assistant Professor at IDSS.  Her research interests are in 

International Political Economy (IPE), with special emphasis on the globalisation-

regionalism relationship, and on questions of development and governance in an era of 

globalisation, particularly as they relate to Southeast Asia.  She has published in various 

journals such as The Pacific Review, ASEAN Economic Bulletin, and the Asian Journal of 

Social Sciences, while her book on Globalisation, Domestic Politics and Regionalism: The  ASEAN Free Trade Area is due to be published by Routledge in 2003.   

 

ii 



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