Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Saturday, November 25, 2017 01:56:14 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Southeast Asia : From miracle to debacle

By
11th-Jul-2017       
Comments
Share your thought
Post a comment »
Read all () »

Jomo Kwame Sundaram :
The World Bank and other influential international financial institutions and development agencies have been touting Southeast Asian (SEA) newly industrializing countries as models for emulation, especially by African developing countries seeking to accelerate their development transformations. But these recommendations are usually based on misleading analysis of their rapid growth and structural transformation.
Sub-regional differences
Typically, various cultural and other justifications are offered to justify recommending SEA, rather than Northeast Asia (NEA), as the better sub-region for emulation. Consequently, important lessons from East Asian experiences have been misrepresented, drawing erroneous lessons from the region's undoubtedly impressive economic performance during its high growth periods.
Despite SEA's much greater resource wealth, NEA's growth performance was superior over the long term in the second half of the 20th century until the 1990s, when Japanese economic growth collapsed following its financial liberalization 'big bang' shock and the strong yen (endaka) decade from 1985. For over two decades, growth in Japan, Korea and Taiwan averaged 8 percent, compared to 6 percent in Malaysia, Thailand and Indonesia.
Population growth has been much lower in NEA, increasing per capita differences over at least a quarter century. While income inequalities have grown in most of SEA, they have remained lower in NEA. Hence, economic welfare improvements have been much greater in NEA.
Education
Most accounts of the 'East Asian miracle' emphasize education. But educational achievements in Indonesia, Malaysia and Thailand have been greatly inferior to NEA's. Ironically, the Philippines, which long had the highest share of tertiary educated in East Asia, has not had an impressive economic growth record.
Thus, actual experience compels scepticism about the facile policy recommendations that governments should enhance human resources, but only subsidize primary schooling. Instead, there is now compelling evidence that industrialization and productivity gains have been slowed by the region's modest progress on education.
Foreign direct investment
Greater SEA dependence on foreign direct investment (FDI) has impeded the development of industrial and technological capacities and capabilities, raising concerns as to whether their industrialization processes were sustainable.
The region has become less attractive for new FDI in the face of growing competition from alternative locations seeking to be part of 'global value chains'. Meanwhile, the supposed 'middle income country' trap in SEA is essentially due to limited development of indigenous industrial and technology capacities owing to modest 'technological learning' from the presence of 'foot-loose' FDI temporarily locating parts of their 'value chains' in the country.
Investment policy reform to promote more sophisticated industries in SEA is long overdue and needs to be coordinated with technology policy reform. SEA governments have not been conducive to elaborating and implementing appropriate investment and technology policies. The rest of SEA has not emulated Singapore's pro-active technology policy attracting desired investments in line with its own national development priorities besides developing capacities and capabilities using government investments.
Financial havoc
Favouring FDI has weakened the influence of domestic industrial capital in the region, allowing financial interests, both domestic and foreign, to become more influential. Finance capital has developed symbiotic relations with other politically influential rentiers, dubbed 'cronies' following the 1997-1998 (mainly Southeast) Asian financial crisis. This powerful alliance successfully promoted partial financial liberalization in the region before the crisis.
Although capital account liberalization greatly increased short-term capital flows, which precipitated the 1997 crisis without increasing FDI, the region has opened up again to short-term capital inflows after accumulating reserves believed sufficient to withstand future crises. This is wrongly referred to as 'self-insurance' although there is no insurance element involved. Meanwhile, regional monetary cooperation has advanced beyond earlier bilateral swap arrangements, but there has been little progress beyond that.
Policies
After 1997, the 'Asian model' fell into disrepute as the East Asian miracle was written off as a debacle. Hence, it is crucial to also recognize the reasons for its inferiority and vulnerability during the high growth period from the 1960s to the 1990s when the Asian financial crisis exposed its new vulnerabilities.
But it would be a mistake to throw the baby out with the bathwater as there are undoubtedly important lessons to be learnt from SEA as well. Also, some of the very policies that the West has criticized were actually crucial for rapid growth and structural transformation in East Asia.
NEA has generally had more sophisticated and effective industrial policy compared to SEA. This accounts, in no small way, for the major differences in industrial and technological capabilities between the two East Asian sub-regions. Of course, there have also been different industrial policy orientations, emphases and instruments within SEA, sometimes involving discernible contrasts in investment and technology policies.
As these policies were inappropriately or prematurely undermined or terminated, the 'miracle' ended, often rather abruptly, due to the financial crises precipitated by liberalization. Contrary to popular Western narratives of the debacle, East Asia's previously successful 'catch-up' efforts had in fact been undermined by financial liberalization promoted by the Washington Consensus.

(Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007).

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Alarming rise in city air pollution


THE presence of pollutant particles in Dhaka's air has become quite high with alarm signals to public health. It was even higher than Delhi and Beijing on last Wednesday, as per a report in a national daily. We know Delhi had closed schools and put other emergency measures only last ...

Cricket »

Smith defies England as Australia fight back


AFP, Brisbane :Skipper Steve Smith led a rescue mission to revive Australia's fortunes after a top-order batting collapse in the Ashes Test against England in Brisbane on Friday.Home hopes rested on Smith to mount a fighting rearguard after the loss of four wickets in a faltering chase after England's first ...

Campus Life »

BD graduates` get together at Alumni London Event


Campus Report :The University of East London (UEL) Bangladesh Alumni Network, UK held its Annual London Event at its Stratford campus on November 20 this year. This was an engaging and encouraging event which brought UEL graduates from Bangladeshi ethnicity, their family and friends together. All the major Bangladeshi community ...

International »

US intelligence official told Israel Russia had `leverage` over Trump : Report


The Independent :Russia had "leverages of pressure" over Donald Trump, Israeli intelligence officials were reportedly told earlier this year by their US counterparts.Members of Mossad, the nation's foreign espionage agency, and other Israeli intelligence officials, attended a meeting at the CIA headquarters at Langley, Virginia, shortly before Mr Trump's inauguration ...

Entertainment »

Bari Siddiqui- at a glance


Entertainment Desk :Bari Siddiqui (born 15 November 1954 - 23 November 2017) was a Bangladeshi singer-songwriter, flutist and folk musician.Personal life:Siddiqui had a daughter, Elita Siddiqui and a son, Sabbir Siddiqui.Early life and career:Siddiqui got his formal vocal training at the age of 12 under Gopal Dutt of Netrokona. Since ...

City »

BNP Vice-Chairman Khondkar Mahbub Hossain, among others, at a discussion on '53rd Birthday of BNP Senior Vice-Chairman Tarique Rahman' organised by Bangladesh Jatiyatabadi Karmajibi Dal at the Jatiya Press Club on Friday.


Cricket »

Mustafiz to play in AKS BPL


Sports Reporter :Pace bowling sensation Mustafizur Rahman will play for Rajshahi Kings against Comilla Victorians in AKS BPL Twenty20 Cricket tomorrow at Zahur Ahmed Chowdhury Stadium in Chittagong. The match begins at 1.00 pm.After getting injury in shoulder, Mustafizur Rahman could not take part in the AKS BPL T20 Cricket ...

Editorial »

School students need be spared from party politics


APPARENTLY not content with being confined to public universities and colleges, Bangladesh Chhatra League, the student front of ruling party Awami League now moves to form committees at secondary schools. It has asked all its organisational units to set up committees in such schools in their respective areas, as per ...

International »

Syria `congress` will boost peace talks: Putin


AFP, Sochi :Russian President Vladimir Putin said Wednesday there was a need for compromise on all sides to end Syria's civil war, announcing plans for a congress of regime and opposition figures he insisted would reinvigorate a hobbled peace process.Such a meeting between representatives of Syrian President Bashar al-Assad and ...

International »

'We are totally unprepared' for artificial intelligence: Hillary


AP, Washington :Former Secretary of State Hillary Clinton told radio host Hugh Hewitt that humanity is "racing headfirst into a new era of artificial intelligence" without sufficient preparations of how that will impact the world."Bill Gates, Elon Musk, Stephen Hawking, a lot of really smart people are sounding an alarm ...

Entertainment »

Jennifer Lawrence opens up about her leaked pictures: It was so unbelievably violating


While many women in Hollywood are coming out with their sexual misconduct stories, Jennifer Lawrence recently looked back at her own invasion of privacy. The 27-year-old Oscar winner revisited the iCloud hack in 2014 that put her nude photos onto the web in a new interview with The Hollywood Reporter's ...

City »

Prime Minister Sheikh Hasina along with other distinguished persons at the inaugural ceremony of CMP Center and School Complex at Savar Cantonment on Thursday.


Weekend Plus »

Great Poet Moulana Jalaluddin Rumi


Literature Desk :Maulana Jalaluddin Rumi was a 13th century Persian poet and a Sufi mystic. He is regarded as one of the greatest spiritual masters and poetical intellects. Born in 1207 AD, he belonged to a family of learned theologians. He made use of everyday life’s circumstances to describe the ...

Weekend Plus »

Mutton Biryani


Coriander powder and star anise powder and is assorted with cooked rice. A perfect main dish recipe, this biryani is best served hot with raita for a tempting dinner, and is a true bliss for non-veg lovers.Ingredients "    2 pinches saffron"    2 green cardamom"    1/2 cup ghee"    1 bay leaf"   ...

Editorial »

Forces Mugabe relied on threw him out


ZIMBABWE'S President Robert Mugabe resigned on Tuesday ending his 37-year rule of the African nation as independence leader from British colonial rule in 1980. He started as a hero but ended as a most unpopular despot through his years of misrule, repression of dissent, election rigging and quarrelling with the ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news