The Economies of Southeast Asia, Second Edition

The Economies of Southeast Asia, Second Edition

Before and After the Crisis

Jose L. Tongzon

This updated and fully revised second edition provides a comprehensive examination of issues of paramount importance for Southeast Asian economies including: the economic implications of the 1997 Asian crisis for both older and newer members of ASEAN; the role of government and FDI in ASEAN economic growth and development; trade patterns with the US, Japan and the EU and the economic implications of China’s accession to the WTO for ASEAN countries; the environmental consequences of industrialisation and growth; the emergence of economic growth triangles and their contribution to ASEAN growth and regional cooperation; the prospects and challenges of ASEAN economic cooperation before and after the crisis; and the key challenges facing ASEAN member countries in the aftermath of the crisis.

Chapter 5: The role of government in ASEAN

Jose L. Tongzon

Subjects: asian studies, asian economics, development studies, development economics


As discussed in the preceding chapters, the adoption of appropriate economic policies has been a major factor responsible for the significant inflow of foreign direct investment (FDI) and high savings rates experienced by most of the ASEAN countries. In particular, their respective governments have played a critical role by formulating and implementing policies that help them achieve macroeconomic and political stability, a liberal export-oriented economic regime and competitive rates of return for investment. Thus, it can be argued that the differences in development performance among the ASEAN countries could be largely explained by their differences in the nature and quality of government intervention. Their respective governments have intervened not only on a macro level but also on a micro level.1 On the microeconomic level, ASEAN governments have intervened by direct and indirect ownership of certain industries, by providing different types of assistance to the private sector and by implementing policies aimed at reducing poverty and income inequality. But the extent and form of microeconomic intervention have varied among the ASEAN countries. This chapter examines the extent and nature of microeconomic intervention in ASEAN and how this type of government intervention has affected their economic development. 5.1 EXTENT AND NATURE OF GOVERNMENT INTERVENTION There is a general consensus that one of the major factors behind the economic performance of the newly industrializing countries and the ASEAN group of countries has been the role played by their respective governments particularly in the maintenance of law and order, and in the formulation and...

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