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 4: The Origin of Initial Institutional Decisions

Bryan K. Ritchie

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

Extract

In the mid-nineteenth century, military explorers were looking to expand the colonial empires of Europe and America. Admiral Perry sailed his iron-clad vessel into Edo (Tokyo) Bay, trained his guns on the emperor’s palace and invited the Japanese to trade. Similarly, Sir Robert Bowring sailed up the Chao Praya River, trained his guns on the royal palace and Wat Phra Kaew temple, and offered the same invitation. As much as Japan and Thailand might not have wanted to trade under the unequal terms offered by these two powers, they were unable to withstand Perry’s and Bowring’s superior technology. It is not as if Japan and Thailand were new to conflict. In fact, like most states, Asian nations were born and shaped amid conflict, both internal and external. Formal states in Korea and Taiwan began as Japanese colonies, while most of the capitalist countries in Southeast Asia were either British colonies, as Malaysia and Singapore, or heavily influenced by British power in the region, as was Thailand. Conflict, coupled with resource endowments and internal strife – systemic vulnerability – shaped the nature of the emerging states in Asia. In this chapter I examine the impact of systemic vulnerability during times of state creation on the preferences of the ruling elite to create particular institutional systems for technological upgrading. In particular, the question is, how did vulnerability influence coalitional politics, which in turn generated preferences for particular institutions at a time when there were few institutions already in place to shape outcomes or when...

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