Endnotes

¹ The GMS comprises Cambodia, People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam. Because of lack of data, we are unable to provide a detailed assessment of Myanmar, as well as Yunnan Province and the Guangxi Zhuang Autonomous Region of the PRC.

² This figure includes the Guangxi Zhuang Autonomous Region of the PRC, which was included in the GMS Economic Cooperation program in December 2004.

³ The other transitional economy in the GMS is Myanmar but we are unable to include it in the analysis because of incomplete information and deficiencies in the quality of reported data. The official data on FDI flows is included in Table 5 however.

⁴ For instance, Tanzi and Davoodi (1997) suggest that corruption induced by inadequate controlling or auditing systems may alter the design of projects by increasing its size and complexity. The size of the "commission" that public officials receive for assisting an enterprise win a foreign investment license or contract is usually a function of the size or complexity of the project itself.

⁵ There are other typologies of FDI. For example, Kawai (2005, pp. 173-5) distinguishes six types of FDI in East Asia. Considering the pattern of FDI in the CLV countries, we use a broader classification in this report.

⁶ In the past 2 years, Oji Paper Company of Japan has acquired BGA Lao Plantation Ltd., which itself was set up in 1996 by investors mainly from New Zealand. A number of Thai pulp and paper companies have also invested in plantations in Savannakhet province. The Aditya Birla Group of India has also identified 50,000 hectares in Savannakhet and Khammuane provinces for a possible pulp fiber plant.

⁷ This is the largest mining project in the Lao PDR and is located in the south of the country. It is operated by Oxiana, an Australian company.

⁸ The data refer to FDI coursed through the banking system. As such, they are likely to understate the actual amount of FDI in the Lao PDR.

Comment(s)

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1. Hong, Sung Ho
   (posted 05 November 2006 / 07:05:25 PM)
   
   I think that the country needs to be in the position where they can control the FDI, in other words, they have to attract the foreign countries' investors in many area of industries.
   
   Having a FDI on what the investors think they can have most profit. It may not be the same industry that the country who is getting a FDI wants to improve on.
   
   In the long run, in order to trigger the spillover or synergy effect, the country needs to have a specific and long term economic growth plan so that they know what industry needs FDI. I think that a country that is getting a FDI needs to diversify to attract foreign investors and more importantly they (government) needs to have a long term economic plans.