Effects of the Asian financial crisis on transnational capital

Whereas international capital hows into Asia were once thought to drive the region's modern economic development, the 1997/1998 financial crisis would appear to have suggested the opposite. The volatility of capital Rows over this period, however, fails to reveal that a significant engine fuelling p ast economic growth of Asia has been the more spatially immobile investment s of transnational corporations. In this paper, we argue that a positive im pact of the crisis has been potentially to attenuate the negative attribute s of the Asian production system resulting in political economic reorganiza tion now on-going in some Asian countries. Drawing from a survey of transna tional firms that was conducted in Hong Kong and Singapore in 1998, we show that foreign firms are responding positively to the expected changes, sugg esting that the crisis could lead to greater embedding of transnational cap ital in the region in the long run. (C) 2001 Elsevier Science Ltd. All righ ts reserved.