Southeast Asia: Economic Development after Independence
How the ASEAN-5 grew fast while others lagged, and the aims, paths, and country case studies behind Southeast Asia's economic development after independence.
Aims
- Economic growth - sustainable; prevent trade deficits; monitor debt.
- Equity - narrow rural-urban and ethnic income gaps; limit crony capitalism.
- Economic nationalism - self-sufficiency; state control; limit foreign firms.
Outcomes
- ASEAN-5 (Singapore, Indonesia, Malaysia, Thailand, Philippines) grew about 7.7% a year; per-capita income rose tenfold from 1970 to 1990.
- Myanmar, after the 1962 coup, turned inwards and lagged; its exports fell from 20% of national income to almost 0.
- Vietnam followed a socialist track, boosted in the late 1980s by oil.
The Path of Development
- Import-substitution industrialisation (ISI) held to the early 1970s.
- Export-oriented industrialisation (EOI) ran from the mid-1970s to 2000, layered on top of ISI.
- Free-trade zones attracted foreign capital.
- Japanese investment flowed in after the Plaza Accord (1985) and the Louvre Accord (1987).
- Japanese FDI rose from US$855 million (1986) to US$4.5 billion (1989).
- Primary product exports fell from 82% to 21% of exports (1970-2001), while manufactured goods rose from 18% to 79%.
Asian Financial Crisis 1997-98
- Currency depreciation, share price collapse, bankruptcies, and recession.
- Indonesia's rupiah fell by 84% in half a year.
- Singapore and Malaysia recovered quickly.
- Thailand and Indonesia needed IMF help.
Ideology and Development
- Socialism in Vietnam - collectivisation and corruption meant only half of industrial capacity was used; GDP fell 3.7% and industrial output 9.6% in 1980.
- Capitalism in Singapore - FDI grew from 9% to 26% of GDP (1965-1980); it reached the highest per-capita income in Asia after Japan.
- Other factors - the destruction of the Japanese Occupation (Philippines: 90% of boats, 85% of locomotives, 70% of roads, and 80% of Manila destroyed) and the decolonisation wars (the Indonesian Revolution and the First Indochina War).
Country Case Studies
Indonesia
The 1967 Investment Law granted tax concessions. Sukarno's Benteng policy and the treatment of the Chinese (about 4% of the population, yet running around three-quarters to 80% of the economy) drove Chinese capital abroad. Under Suharto, 23% of Repelita I went to agriculture; rice output rose from 12.4 to 49.2 million tonnes while imports fell from 1.9 million tonnes to 30,000; the BIMAS and INMAS programmes and the PTN state rice company drove production.
Philippines
Support relied on IRRI and IR-8 dwarf rice, and the Masagana 99 programme (1973). Notes record that Marcos declared self-reliance in rice in 1968.
Cold War and Economic Development
- US aid (the Marshall Plan and the Truman Doctrine) was aimed at containing communism.
- The Vietnam War boosted Thailand and the Philippines through rubber, military goods, and Rest and Recreation.
- The US opened its markets to allies.
- The same war damaged infrastructure in Vietnam, Laos, and Cambodia.
Colonial Legacies
- Exports of raw materials came to depend on Western colonial powers.
- The Great Depression hit Malaya's rubber exports hard (202 million to 37 million Straits dollars, 1929-1932).
- Manufacturing employed under 10% of the labour force in the 1960s.
- There was a large unskilled rural labour pool and weak education.