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 7: Institutional Formation and Skills Development

Bryan K. Ritchie

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


Development theory suggests that institutions that foster ‘embedded autonomy,’ create capacity needed to upgrade technologically (Evans, 1995). This chapter explores how institutions in Malaysia, Singapore and Thailand operate to create the tight, integrated linkages within the public sector and between public and private actors needed for embedded autonomy to function. As earlier chapters explained, institutional formation during critical junctures led to particular orientations of intra-bureaucratic processes and operation. At the same time, initial decisions of language, bureaucracy, labor and technology led to the creation of institutions that shaped the degree to which the education and training system was able to operate with tight integrated linkages to the private sector. Where bureaucracies were highly linked in rational operation and also tightly connected to the private sector, technological upgrading flourished. While it is possible to see the impact of the types of connective relationships described above in many different economic policies and initiatives associated with upgrading, three in particular reveal clearly the differences among the knowledge creation systems in Malaysia, Singapore and Thailand. What makes the comparison in the three areas particularly useful is that all three countries aggressively pursued each initiative. The first initiative is the formation and operation of a ‘skills development fund’ designed to overcome ‘poaching’ dilemmas by subsidizing the supply of technically skilled and knowledgeable workers. The second initiative is the creation of a government investment promotion agency to create agglomeration economies of high-tech firms. Incentives aimed at upgrading the technological content of investment drive demand for...

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