The New Political Economy of Southeast Asia

The New Political Economy of Southeast Asia

Edited by Rajah Rasiah and Johannes Dragsbaek Schmidt

This well-researched book examines the dramatic transformation of Southeast Asian countries from agricultural and mining economies to industrial nations.

Chapter 2: Industrialization in the Second-tier NIEs

Rajah Rasiah

Subjects: asian studies, asian economics, economics and finance, asian economics, political economy, politics and public policy, political economy

Extract

Rajah Rasiah1 Southeast Asia’s market economies have recorded substantial manufacturing growth, particularly since the 1990s, driven by export-orientation from 1965 in Singapore, 1971 in Malaysia, 1980 in Thailand, 1986 in Indonesia and 1995 in the Philippines. Since the work of Hamilton (1983) and subsequently Deyo (1985), Amsden (1989), Wade (1990) and Chang (1994), there has been a rise in statist accounts of rapid industrialization in East Asia. Analyses of Southeast Asia, however, have differed starkly. The World Bank (1993) credited liberal policies as being the springboard of successful industrialization in Southeast Asia, while Doner (1991), Jomo (1996), Rasiah and Ishak (2001), Rasiah (2003), and Lauridsen (2008) argue that an eclectic combination of interventionist and liberal policies has characterized Southeast Asian industrialization, with mixed results. Given the rising tide of opposition to protection and subsidies, especially with the formation of the World Trade Organization (WTO), these accounts of Malaysia, Thailand and Indonesia have led to perceptions that they offer better examples than South Korea and Taiwan. Also, unlike the resource-poor Northeast Asian first-tier newly industrialized economies (NIEs), the second-tier Southeast Asian NIEs are major exporters of primary commodities and as a consequence to some offer useful lessons about the relevance of resource endowments for economic growth (World Bank, 1993). Doubts have also been raised over trade theory and market-friendly explanations of growth. If Amsden’s (1989), Chang’s (2003) and Reinert’s (2007) argument on the need for actively ‘getting relative prices wrong’ is important for quickening industrial catch-up, then accounts to follow existing...

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