U.S. Contractual Arrangements in Some ASEAN Countries: Selected case studies in Thailand

Abstract

During the 1970s the economic performance of the ASEAN countries was relatively impres sive. Despite the prolonged global recession, the annual GNP growth of the ASEAN mem bers ranged between 6.2 per cent (for the Philippines) and 8.4 per cent (for Singapore). In addition, their industrial growth was high, ranging between 8.4 and 11.3 per cent. The relatively rapid growth of these economies which implied an expanding market naturally attracted transnational corporations (TNCs) to the region. The OECD statistics indicate that foreign direct investments increased from US$3.4 million in 1971 to US$12.6 billion in 1978.1 The ASEAN members' share of the stock of foreign direct investment in develop ing countries rose from 7.5 per cent in 1971 to 14.3 per cent and in 1978 accounted for 5.1 per cent of the global stock of foreign investments. Looking at the stock of foreign investment is, however, to underestimate the extent of U.S. TNC involvement in these economies. TNCs have been increasingly involved in numerous forms of non-equity contractual arrangements, for example, production sharing agreements, compensatory trade agreements, and various modes of contractual lrrange ments for technology transfer. In the area of technology transfer trans national enterprises from the United States have emerged as world leaders in technology sales. In 1981, the United States received US$7.1 billion from technology exports.2 Japan, the major industrial country of the East, only exported US$537 million in that year. This paper aims at exploring U.S. involve ment in the ASEAN region with special em phasis on U.S. contractual arrangements for technology transfer and a U.S. joint-venture arrangement in Thailand. The following sec tion briefly reviews U.S. contractual arrange ments in the ASEAN region. Employing a case study approach, this paper then probes into some of the firms' non-equity and equity arrangements in certain manufacturing activi ties in Thailand.