Systemic Vulnerability and Sustainable Economic Growth

Systemic Vulnerability and Sustainable Economic Growth

Skills and Upgrading in Southeast Asia

Bryan K. Ritchie

For many developing countries, economic growth is an elusive quest. Both economists and policymakers have long known that issues such as education, investment and infrastructure are necessary ingredients for development and yet only a very small number of countries seem to be able to come up with the right mix of these ingredients. Bryan Ritchie demonstrates how political relationships among government, business, academic and labor leaders create different incentives for economic actors to make key decisions to promote economic upgrading and sustainable development.

Chapter 1: Introduction

Bryan K. Ritchie

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics

Extract

Recognize that the only resource you have is your people, their brains, and their skills. E.J. Mayer, former director of the Industrial Planning Department of Israel’s Ministry of Commerce and Industry The quality of a people determines the outcome of a nation. Lee Kuan Yew, Senior Minister of Singapore According to one prominent development economist, economic development has been an ‘elusive quest’ (Easterly, 2001). But while this is true in many regions of the world, there is one region where at least five countries – Indonesia, Malaysia, the Philippines, Singapore and Thailand – have averaged over 6 percent growth since 1970 (World Bank, 2005) and one country, Singapore, is achieving levels of technological capacity found in developed countries. In all five countries the manufacturing sector has expanded, a broadening and diversified range of goods is produced and exported, and a growing emphasis has been placed on technology products. Such diversification or ‘structural change’ is a significant achievement. In fact, the World Bank (1993) was so impressed by this diversification that it suggested that Southeast Asia was an example other developing countries should emulate. But diversification may no longer be enough for sustainable development. This is not to argue that diversification or even large infrastructure and other heavy industrial developments are not evidence of economic progress. But although second-generation development projects typically have high capital and management requirements, their technology requirements are well known and can often be acquired and used ‘off the shelf’ even if only contracting outside consultants. By comparison, ‘new...