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 13: Domestic capital development and the environment

Jose L. Tongzon

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


Foreign direct investment has played a very important role in ASEAN economic development, as Chapters 2 and 9 show, as an important source of capital and technology. But the ASEAN economies and developing countries in general must develop their own local capital and home-grown technology to achieve a sustainable economic development. The importance of developing domestic capital and entrepreneurship has been emphasized on many occasions by the respective ASEAN governments.1 This is because domestic capital can become a vanguard of economic development by fostering technology development, as demonstrated in the West. Further, it is a good way to reduce ASEAN’s reliance on foreign capital and technology which is good for their long-term economic and political stability. Another challenge confronting the rapidly industrializing ASEAN economies today is to ensure that economic success does not come at the cost of environmental degradation and lack of sustainability. Their depletable natural resources must be transformed into man-made resources while the rate of depreciation must not be more than the rate of growth of their renewable resources in the process of satisfying their economic needs. However, rising population and expectations are likely to put more pressure on their natural resources including water, forests, coral reefs and other threatened natural resources. Rapid growth and industrialization have constrained the capacity of the ASEAN countries’ environment to provide suitable human habitats and ecological support systems. The negative side-effects of industrial growth, which is centred around the capital cities, such as pollution, hazardous waste and congestion have caused so...

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