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 6: The Legacies of Initial Choices

Bryan K. Ritchie

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


Since 1995, children in the USA have made significant gains in math scores. This is good news to many, as it is widely believed that proficiency in technical subjects like math and science are key to sustaining innovative economies. But as the scores of the children in the USA climb, so too do those of the children in some of the countries in Asia, only faster. The edge that these Asian countries, notably Singapore and Taiwan, have in math and science keeps growing.1 This growing gap between education and training outcomes is due, in large part, to early decisions made decades ago during periods of institutional formation and change. The point is that institutions for education and training created in response to preferences generated by coalitional politics are vulnerable to both economic and political increasing returns.2 Large set-up costs, learning effects and adaptive expectations make coordinated and interconnected activities and institutions more effective than fragmented and isolated efforts (Ritchie, 2005a). As important, the collective nature of education and training systems, the density of its policies and institutions, its vulnerability to politics, and the complexity and opacity of its operations mean that interests can easily become vested over time and that paths once chosen are not easily changed.3 Once formed, institutional systems feed back into coalitional politics. In the case of Malaysia, Singapore and Thailand, early decisions regarding language, bureaucracy, labor and technology have all influenced increasing returns from both an economic and a political perspective. The other important observation stemming...

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