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2017 | Book

Southeast Asia: Beyond Crises and Traps Read chapter Read first chapter

Southeast Asia beyond Crises and Traps

Economic Growth and Upgrading

Editors: Dr. Boo Teik Khoo, Keiichi Tsunekawa, Motoko Kawano

Publisher: Springer International Publishing

Book Series : Studies in Economic Transition

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book examines five countries in South East Asia that are instructive case studies of how the region has had to negotiate pathways of development beyond crises and traps. At two ends of just one decade, 1997–2007, Indonesia, Malaysia, the Philippines, Thailand and Vietnam all had to weather the shocks of an East Asian financial crisis and a global financial crisis. Some economies might have buckled completely under those shocks and been condemned to long-term stagnation. Yet these five economies, part of the larger Asian region, emerged with continued if slower economic growth.
An important theme of this book is that their resilience has been partly derived from the pursuit of growth and competitiveness along less known or recommended pathways. The chapters of this book take a novel approach to South East Asia’s search for growth and improvement. They do not begin by evaluating how far macro-level performances would take a particular country towards high-income status. Instead they provide original insights into actual cases of intermediate ways of achieving growth, upgrading and income improvement in non-privileged sectors. Such cases may hold more relevant lessons for the majority of developing countries than the experiences of highly developed economies.

Table of Contents

Frontmatter
1. Southeast Asia: Beyond Crises and Traps
Abstract
There is persistent concern that Southeast Asian economies may eventually fall into the ‘middle-income trap’ due to the slow upgrading of their technological capabilities. However, the five Southeast Asian countries (Malaysia, Thailand, Indonesia, Philippines, and Vietnam) covered by this volume have performed much better economically than many non-Asian middle-income countries although not as well as the four East Asian ‘tiger economies’ and China. Those Southeast Asian economies have derived an important part of their vitality by pursuing economic growth and competitiveness along lesser known or recommended pathways such as niche-oriented activities, natural resource processing, and cheap labour-based production, or a combination of these. In the final analysis the technological upgrading of industries and services, including resource-based and niche-oriented ones, will remain the most plausible way to continue catching up with the advanced economies and to stay competitive vis-à-vis emerging rivals. However, just as past development trajectories had been shaped by domestic socio-political configurations and the international/regional environment, so future prospects for these countries depend on how well they adapt to the fluid conditions of global competition and the uncertain state of global markets. They would also have to overcome a sort of ‘socio-political trap’ of oligarchic aggrandizement and populist pressures that result in fragmented interests without a national consensus for upgrading industries and services.
Khoo Boo Teik, Keiichi Tsunekawa

Surveys of Political Economy

Frontmatter
2. New Growth Strategies of Thailand’s Big Firms in the ASEAN Economic Community Era
Abstract
Thailand is going to experience the slowdown of growth due to the rise of wage level, decline of labour productivity, and poor expenditure of R&D activities. To overcome the traditional pattern of growth based on the low-cost advantage, Thailand is required to promote upgrading of technology in core manufacturing industries such as IT and automobiles. However, these industries have been under the control of foreign firms or MNCs after the 1997 Asian crisis, and the progress of innovation is now depending on the strategy of MNCs. On the other hand, if looking at movements of big local firms (leading family businesses), Thailand seems to suggest another ways to realise continuous growth. They include: shifting main business areas from core manufacturing industries to agro-industry and service sectors; development of niche products and markets rather than new products and technology; targeting regional markets including domestic market rather than 3G markets (USA, EU, and Japan); and strategic alliance with Chinese firms rather than joint ventures with Japanese and Western ones. These movements are examined in reference to the author’s original data on local firms.
Akira Suehiro
3. State, Industry, and Business in Indonesia’s Transformation
Abstract
This chapter discusses the importance of institutional arrangements underpinning development strategies, by examining Indonesia’s institutional transformation involving the state, industry, and business during the last five decades. Indonesia’s experience demonstrates that, without institutional arrangements for designing and implementing development strategies, developing countries endowed with natural resources can easily ‘return to nature’ as producer-exporters of primary commodities, regardless of whether they are under authoritarianism or a democracy. Opportunities and challenges are two sides of the same coin. Natural-resource industries can be knowledge-intensive if they are accompanied with innovation in the upstream and in its connection to processing, manufacturing, branding, marketing, and R&D activities along value chains. The state must be effective in arranging institutions to formulate and consistently implement development strategies and in providing incentives for business agents to invest in higher-value-generating activities. Indonesia’s ups and downs in industrial development under inconsistent role of the state will provide implications for other emerging countries with natural resources.
Yuri Sato
4. Vietnam’s Post-WTO Industrial Development: Strategies and Realities
Abstract
This chapter examines the progress of Vietnam’s industrial development, which is vital for the country’s sustained economic growth. The analysis of the manufacturing sector as a whole and firm-level case studies find a stark gap between strategies and realities. Despite varieties of policy interventions made, actual transformation of industries has been driven largely by market forces. This market-led mechanism has worked relatively well in developing labour-intensive industries. However, Vietnam’s endeavours toward the next stage of industrial development likely require a more targeted approach for channelling available resources and coordinating different players. To this end, Vietnam should make effective use of international economic integration to deal with key obstacles to reforms, which are deeply embedded in its political economy structure.
Mai Fujita
5. Malaysia’s Transformation: High Income, Middle Capability
Abstract
The Malaysian economy, transformed over the past decades, is nearing the international high-income threshold, and will pass it as long as it grows faster than the high-income countries. However, given the persistence of low-skilled production and lagging progress of domestic technology, innovation, and research and development, Malaysia still has some distance to go before being considered an advanced economy – characterised by high levels of capability, technology, and empowerment. Within the overarching theme of Malaysia’s capability shortcomings, two challenges stand out: declining quality of education, and difficulty in enhancing the efficacy of affirmative action and charting exit paths for the policy. Addressing these challenges will crucially impact on the long-term progress of Malaysia’s economic transformation.
Hwok-Aun Lee

In Search of Continuous Improvement

Frontmatter
6. Industrial Innovation in Thailand: The Electronics, Automotive and Seafood Sectors
Abstract
Thailand had a mixed record in industrial development. Its average growth rate in the past 50 years was relatively high and the country has moved from a low-income to upper middle-income country. Nevertheless, it was not so successful in terms of deepening its technological and innovative capabilities. By examining three leading industries (electronics, automotive, and frozen seafood), this chapter illustrates that, to a considerable extent, the situation has changed since the late 1990s. Both foreign and local firms paid much more attention to strengthening their technological capabilities. The presence of lead firms in pressuring and incentivising other firms, and sector-specific government policies are very important contributing factors.
Patarapong Intarakumnerd
7. Upgrading Malaysia’s Rubber Manufacturing: Trajectories and Challenges
Abstract
The rapid economic growth of Malaysia has often been attributed to FDI-led EOI, and the country’s economy shows nearly high income status. It is important to add, however, that natural resource-based industry had also contributed significantly to the growth of Malaysia. This chapter examines the expansion and transformation of the rubber industry in Malaysia, focusing on the rubber glove firms as successful niche-oriented actors. Rubber has played an important role in the global economy and automotive society since the beginning of the twentieth century. Since the late 1980s, Thailand and Indonesia have overtaken Malaysia as the top natural rubber producers. From the late twentieth century, however, the awareness of the risks of HIV/AIDS, SARS, and avian influenza has raised the demand for medical rubber gloves. Taking advantage of the technology developed by government R&D institutions, Malaysia’s local venture rubber glove firms achieved the technological upgrading quickly and seized the opportunities created by escalating global demand. To maintain the sustainable development of natural resource-based industry, it will be crucial to create and improve close public–private relationships.
Motoko Kawano
8. Philippine Services Sector: Domestic Policy and Global Markets
Abstract
The Philippines experienced a dramatic turnaround in the past decade: once the proverbial basket case, its economy distinguished itself as among the world’s fastest growing by the start of the 2010s. This chapter attributes the country’s spectacular growth to its booming international trade in services, notably, its labour export and business process outsourcing (BPO) industries. External and domestic factors combined to produce the boom. The fragmentation of global production and technological advancement created new opportunities for the services industries, but domestic policy also aggressively linked Philippine labour to global markets, institutionalising the deployment of Philippine workers abroad and incentivising the proliferation of so-called cyberzones to attract global BPO providers. The chapter argues that trade in services has enabled the country to go beyond the structural constraints that had previously hampered growth, and introduces the concept of labour export hazard in which substantial earnings from abroad remove the incentive for the Philippine state to improve the domestic economy. That said, for the country to climb up the value chain in services would require increasing investment in human capital and broadening the nexus between manufacturing and the services sectors.
Antoinette R. Raquiza
9. Indonesia’s Mining Industry, 1997–2014: An Institutional Assessment
Abstract
This chapter argues that the 1997–98 crisis and Law 4 2009 drastically transformed the distribution of rents from mining resources among the players who include the central and local governments and the foreign companies. The enactment of Law 4 2009 on minerals and coal and its implementing regulations specifically expanded the power of local governments. This law banned the export of raw minerals. A moderate but stagnant economic growth of about 5 per cent in 2014 did not constitute a strong economic basis for a prolonged export restriction of unprocessed minerals. Therefore, the government had to settle with foreign mining companies in the country.
Wahyu Prasetyawan
10. Towards a Southeast Asian Variety of Capitalism?
Abstract
The concluding chapter synthesises the shared pursuit of the essays in this volume and offers additional reflections on Southeast Asian political economies. The discussion begins with the relationship between authoritarianism and economic transformation (in Singapore and Malaysia), followed by the impact of democratic reform on rent-seeking patterns (in Indonesia and Thailand) and the neglected issue of labour politics (in the region as a whole). The next section discusses policy implications spanning from industrial policy and intermediary organisations to state-owned enterprise reform. The chapter closes by proposing a typology of Southeast Asian capitalism to illustrate the converging and diverging facets among Malaysia, Thailand, Indonesia, the Philippines, and Vietnam.
Veerayooth Kanchoochat
Backmatter
Metadata
Title
Southeast Asia beyond Crises and Traps
Editors
Dr. Boo Teik Khoo
Keiichi Tsunekawa
Motoko Kawano
Copyright Year
2017
Electronic ISBN
978-3-319-55038-1
Print ISBN
978-3-319-55037-4
DOI
https://doi.org/10.1007/978-3-319-55038-1