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 3: Some Preliminary Evidence

Bryan K. Ritchie

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


This book claims that systemic vulnerability shapes the breadth of coalitions and the level of participation of its members. As breadth and participation rise, the ability to create productive public–private interactions also rises, increasing society’s ability to develop institutions that lead to higher levels of intellectual capital, a core ingredient of long-term, sustainable economic upgrading. Alternatively, less vulnerable conditions create incentives for more narrow, less participative coalitions. The results are fewer productive linkages, fewer institutions capable of handling the tasks of upgrading and, hence, less technical intellectual capital. What is the evidence behind these arguments? This chapter conducts preliminary tests on these hypotheses by evaluating correlative evidence, both qualitative and quantitative. The point is that before explaining how things happen, it would be nice to know how confident we are whether they happened. After evaluating the strength of correlative relationships in this chapter, I then explore in subsequent chapters the causal relationships behind the correlations through comparative process tracing – the work of examining causal explanations both over time and across cases. Three steps are useful in determining the extent and strength of hypothesized relationships. The first, qualitative matching within the countries of Southeast Asia, provides control for regional variation and considers the counterfactuals on several key variables. This effort is designed to eliminate potential alternative correlative relationships, thereby relieving any worries of omitted-variable bias. The second is a regional comparison between Northeast and Southeast Asia using both qualitative and quantitative data. Whereas the first effort is designed to eliminate...

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