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Economic Development
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By Tessa Tin

CONTEXT
What are the macroeconomic concepts which must be known?

Command Economy

an economy in which the state controls all major sectors and determines
what and how much to produce

government takes central position in controlling economy (mostly in

socialist countries)

Market Economy

an economy in which the production and distribution of goods, and their

prices, is determined by the free market

government intervention in varying degrees eg provision of public goods

Import Substitution Industrialisation (ISI)

substitutes imports of manufactured goods with locally-produced

equivalents

a strategy to develop the economy by establishing a local industrial base

foreign goods are kept out by high tariffs or high quotas

Export-Oriented Industrialisation (EOI)

country should produce and export goods in which it has comparative

advantages

comparative advantages = country can produce goods more efficiently

than other countries

→ country's economy is driven by the export of these products (vs ISI)

GDP/GNP and GDP/GNP per capita

Economic Development 1
 Gross Domestic Product (GDP): is the value of all goods and services
produced in a given country within a given time period (what you get
domestically)

→ GREATEST indicator of country's economy

Gross National Product (GNP): is the value of all goods and services
produced by a given country within a given time period - ie its GDP plus
earnings from foreign investment made by the country's citizens and
corporations (what you get from your economy & exports)

→ usually to measure economic growth → productive capacity of the

economy has increased

Per Capita: an average measure of how wealthy the country's citizens

are

calculated by dividing GDP/GNP by the number of people in the

country

→ not representative of income gap or standard of living

International Trade

Fixed Exchange Rate

a fixed exchange rate is when a country decides to maintain its

currency at a fixed value against another country

maintaining a fixed exchange rate:

buy and sell own currency using foreign currency reserves in the
international money market

when own currency value is low: reduces supply of own

currency → pushing up its value

when own currency value is high: sell own currency → increases

supply → pushing down its value

Protectionism

protectionism is the practice of restricting trade between your

country and other countries

through tariffs that make imported good expensive → reduce

demand OR quotas that directly limit the amount of imports that
enter your country

Economic Development 2
 key to ISI → creation of local industrial base

What were the Challenges of Post-Independent SEA economies?

Economic Vacuum

SEA countries lacked viable institutions to drive economic growth

due to colonial rule → colonial powers were mainly interested in raw

materials and not the development of the country's economy

NO COMPETENT INSTITUTIONS existed to oversee economic

development

Lack of educated indigenous middle class with the capital and

expertise

Private capital concentrated in the hands of ethnic minority

communities

Problem compounded by the devastation of WWII

SOLUTION: GOVERNMENT INTERVENTION

Over-Reliance on Primary Products

Most SEA economies were not diversified → largely based on

agriculture and primary production

eg Malayan economy in 1957 had 85% of export earnings based on

tin and rubber

needed to reduce dependence on primary products due to price volatility

of these on global markets

diversification → make the market more resilient

SOLUTION: INDUSTRIALISATION TO BUILD UP THE

MANUFACTURING SECTOR

STRATEGY USED: ISI (substituted good imported with local

industries)

Foreign Economic Dominance

SEA economies were dominated by ethnic minorities or other

foreign interests (also because of colonial rule)

foreign aid and investment required to build up local

entrepreneurial enterprise and capital

Economic Development 3
 had to be balanced with the goal of economic nationalism

Maintaining Economic Development in the Long Run

Capitalist model: ISI - good for establishing a manufacturing base &

diversifying the economy

BUT protectionism led to inefficiency → lack of competition → little

incentive to innovate/improve

In socialist countries, state control proved unviable/ineffective to ensure

economic development in the long run

SOLUTION: CHANGE OF STRATEGY

SHIFT FROM ISI TO EOI: economy is opened up to foreign

investment → foreign firms are allowed to compete with local
producers

The Problem of Corruption

corruption: countries with authoritarian regimes did not have

significant checks and balances on the actions of their leaders

→ leaders often enriched themselves at the expense of the country

no strong regulatory frameworks to control or monitor their financial

systems → contributed to the economic meltdown of AFC in 1997

SOLUTION

VERY DIFFICULT TO ERADICATE ☹

STRENGTHENED FINANCIAL REGULATORY FRAMEWORKS
AFTER AFC

What were the aims and strategies of SEA countries?

Economic Aims

Economic Growth

measured in terms of GDP growth, with an increase in the

productive capacity of the economy and in national income, meaning
increase in living standards within the country

an essential aim as countries sought to recover from the devastation

of WWII

Economic Development 4
 economic growth was also a basis for political legitimacy (eg
Singapore's PAP & Suharto's Orde Baru)

SUSTAINABLE Growth → long term economic growth → transferred

to people

CAPITALIST STATES:

ISI in early years to build up an industrial base and reduce

dependence on primary products

EOI after local industries have become inefficient due to lack of

competition → open country to foreign investment

SOCIALIST STATES:

Initial emphasis on heavy industry based on the Stalinist model

Command economies with little role for private sector → capital

provided by the state or communist bloc

Equity

equity measures how evenly the fruits of economic fruits of

economic growth are distributed amongst the populace

lack of equity → political instability → social and economic divide

(when fruits of economic growth only goes to a tiny group of people
in society)

equity is ensured when:

equality of opportunity → meritocracy system (eg singapore)

affirmative action policies (eg malaysia's nef)

Economic Nationalism

indigenise wealth and production → reduce the foreign stake within

the economy

why? for national pride or strategic reasons

Strategies:

ISI → reduces country's dependence on foreign imports

more darkly, discriminatory policies against foreign communities

within the country

Economic Development 5
 ie Ne Win's Burma vs Indians

ie experts vs indigenous

Types of Economies

Capitalist

Free market forces (aka the 'invisible hand') play a key role in the
allocation of goods and services

undertakes a shift from ISI to EOI → growth dependent on exports >

domestic manufacturing

role of private sector — both foreign and local corporations — is

very prominent!!

Strategies: Direct and Indirect intervention

Direct Intervention (the government): state uses state funds to

directly increase the productive capacity of the economy

State-Owned Enterprises (SOEs)

Government Monopolies

Indirect Intervention (industries): the state channels its funds

towards creating a conducive environment for private enterprise

Economic Planning

Infrastructure Development (eg the construction of roads,

railways, parts and airports, factory and office spaces etc)

Business-Friendly Policies (eg favourable taxation policies

or government aid in the form of joint-ventures)

Importance of Foreign Investment and Aid

Indirect Intervention was aimed at increasing foreign

investments → foreign aid poured in with political
motivations

eg IMF and WB provided aid on condition that countries

which accepted export-oriented policies in line with
these bodies' focus on global free trades

eg US aid to various SEA governments in Cold War

backdrop

Economic Development 6
 ASSESSMENT:

Almost all filled the economic vacuum and demonstrated

strong growth

SOME were not sustainable

growth but inequitable distribution of wealth

Corruption as a major problem!! → growth not built on

strong foundations

→ Maintaining successful economic development in the long term →

strong institutions to check corruption & flexibility and pragmatism to
consistently tweak economic policy

Socialist

GOVERNMENT'S ROLE IS PERVASIVE!! → ALL GOVERNMENT!!!

ALL means of production are in the hands of the state!! →

Government decides what and how much to produce → COMMAND
ECONOMY

Little or no room for foreign investment in socialist economies

Foreign aid may come from Communist countries/bodies like

COMECON

Both Communist governments and authoritarian governments set up

Socialist Economies → greater control over the country

ASSESSMENT:

State control of the economy did fill the economic vacuum →

damage from WWII was repaired

State-industrialisation created the manufacturing sector

Received additional capital in the form of aid from the

Communist bloc

YET economic success was elusive due to inefficiency → lack of

competition & lack of a profit motive

Third Way

Incoherent policies that privileged ideology over sound economic

management

Economic Development 7
 OUTCOME: ECONOMIC DISASTER

SUMMARY

Governments played the most influential role in economic development

CAPITALIST: Flexible & incorruptible → success!

SOCIALIST: Initially filled the economic vacuum but economic

liberalisation was needed to bring growth in the long term

THIRD WAY: Total Failures

→ Governments had to be flexible and pragmatic to achieve economic

success

What were the FACTORS for Economic Development?

The Government

Look at the Types of Economies

Role of Ethnic Minorities

Non-Indigenous Minorities (Chinese and Indians) dominated the

economy in colonial times

Chinese → Malaysia, Thailand and Indonesia

Indians → Burma

Dominated the banking and money-lending sectors → holding much

capital → filled the gap of the colonial masters

Indians in Burma → Professional Elites → backbone of the colonial

civil services

Economic Dominance carried over independence → main source of

economic expertise and capital

Governments used them to further economic development, perpetuating

the unequal distribution of wealth in the country

Targeted and even removed by some regimes to fulfil aim of

economic nationalism (eg Ne Win)

Foreign Aid & Investment

1. Politically Motivated Lending

Economic Development 8
 From the US → encourage/reward anti-communist regimes eg
South Vietnam and Thailand

From the USSR and PRC → encourage pro-communist regimes eg

North Vietnam, SRV and Sukarno's Indonesia

2. Aid from Japan

Development assistance to the tune of $3353million by 1980 → with

compulsory economic advice

3. Investments from multilateral organisations (eg WB and IMF)

with compulsory economic advice to open up economy

Regional & Technological Developments

Green Revolution

Series of global initiatives involving the development of high-yielding

grains, chemical fertilisers and pesticides, and irrigation techniques
(AGRICULTURE)

*Development of High-Yielding variant of rice known as IR8 at the

IRRI (Philippines) in the 1960s → spread to rest of Asia →
COMPETITIVENESS!!!

Better Quantity and Increased Quantity → Increased Sales

NOTE: Ne Win's Burma did not embrace due to close-door

economic policy

High-yielding variants of other crops (eg rubber) and the spread of

farm machinery and irrigation techniques that improved yields

Rice and Agricultural Production benefited hugely → decreased

famine, achievement of self-sufficiency and surplus production sold
for profit on the world market

Global Developments

Capital-Intensive Industries like Electronics (1970s onward)

Benefited countries with largely skilled workforce (eg Singapore) →

Rendered heavy industry in Vietnam and Burma obsolete
(Agricultural products → backwards) → finding difficulty in re-training
their workforces and replacing industrial equipment

Economic Development 9
 Growing importance of the private sector (eg Singapore) leveraged
various advantages to offer banking and financial services &
emphasised tourism

FACTORS
THE GOVERNMENT

Indeed, the role of the government was paramount because they made the
crucial decisions which decided the boom or bust of their country's
economy.

INDONESIA (SUHARTO)

BOOM! ORDER BARU (NEW ORDER)

The government pursued the ISI by building its domestic industrial

base by investing in basic industries such as steel and concrete and
implementing protectionism.

As a result, the economy prospered in the 1970s with an annual

average of 70%. The government's decision to embrace EOI in the
mid-1980s meant that there was increased privatisation which
created more employment thus resulting in a GDP growth of 7% in
the 1990.

Manufactured exports was grew from l<US$1billion (1982)

→US$9billion (1990)

BURMA (U NU'S PYIDAWTHA)

BUST! PYIDAWTHA

An example of the failure of the Pyidawtha was the state-owned

boards such as State Agricultural Marketing Board (SAMB) failed to
enhance rice production which was Burma's main export. This was
worsened by the drop in the global price which further worsened
Burma's economic condition.

The role of the government was crucial because they were most
responsible for ensuring that the sustainability of the economic growth
enjoyed through the introduction of checks and balances.

SINGAPORE

SUSTAINABILITY:

Economic Development 10
 As early as 1980, the Monetary Authority of Singapore (MAS)
underwent reorganisation and restructuring of the agency to sharpen
its effectiveness.

A new exchange rate-centred monetary policy framework which was

sensitive to fluctuations in the currency was subsequently
implemented in 1981.

→ This new policy direction was successful in mitigating and

cushioning the impact of the Asian Financial Crisis from 1997 to
1998

THAILAND

SUSTAINABILITY

Bangkok International Banking Facility (BIBF) [1993] facilitated loans

from the USA money market to Thai banks and finance companies
with no regulatory restrictions and barriers.

→ This resulted in excessive borrowing and lending wich was

worsened by corrupt government officials who used their position to
borrow with the intention to default or investing in unsound projects.
These laid the foundations for the subsequent AFC.

Pivotal role of governments which provided the economic direction which

determined the roles that the non-indigenous minorities were able to play
in Southeast Asian economies.

SUHARTO'S INDONESIA

Suharto’s desire for economic growth meant that despite his initial
discriminatory policies towards the Chinese, he subsequently
embraced a cordial relationship with the business elites from the
Chinese community eg Liem Sioe Liong which ensured the
continued contribution of the Chinese community.

NE WIN'S BURMA

Ne Win’s pursuit of economic nationalism through the Burmese Way

to Socialism meant the eviction of 10,000 Indians which meant that
they ceased to contribute to the Burmese economy

Indeed, economic development was driven by state actors in the form of

the governments which embraced liberal policies which drove the
economies of their respective countries forward.

Economic Development 11
 SINGAPORE

Singapore enjoyed consistent economic growth as seen by 6-7%

growth rates in early 90s.

Service sectors which provided 16% of GDP in 1965 saw a rise to it

providing 28% of GDP

MALAYSIA

Mahathir’s liberalisation of Malaysia’s economy and emphasis on

industrialisation made it one of the largest exporters of
semiconductors, textiles and footwear in the 90s.

Manufacturing made up 60% of total exports in 1990.

Malaysia also achieved 8% annual growth in the 1980’s – 90s →

one of the wealthiest countries in Southeast Asia.

Furthermore, the failure of governments to embrace pragmatic policies

further emphasise the centrality of state actors in developing the
economy.

SUKARNO'S INDONESIA

The manufacturing sector which was protected and most focused

upon by Sukarno’s government made the smallest contribution to
the economy in 1960.

→ As a result, demand for Indonesia’s products dropped

domestically and internationally as seen by the drop in the value of
the exports from US$931 million (1959) to US$685million (1966).

Inflation was at 1500% (between June 1965 and 1966)

NE WIN'S BURMA

The Burmese Way To Socialism saw the nationalisation of most

major industries by 1965 (by 1960, the government controlled 60%
of manufacturing and 90% of legal trade) while also dictating what
should be grown/produced.

→ As a result, rice exports dropped from the already low percentage

of 42% (of exports earning) in 1962 to 14.9% in 1972

ROLE OF ETHNIC MINORITIES

Economic Development 12
 Despite the decisions made by the governments which laid the foundations
for the countries' economic result, the expertise provided by the Asiatic
communities should not be overlooked.

Significant in determining the success of the economies of Southeast Asian

countries because they were able to provide their expertise and knowledge

CRUCIAL EXPERTISE IN DEVELOPING INFANT ECONOMIES OF SEA

COUNTRIES

BURMESE INDIANS

The Indian community existed in the financial industry (banking and

money lending industries) since British colonial rule.

Also became clerks, professionals and civil servants.

Their importance was seen when their removal from Burma caused
a drain on capital and expertise which was detrimental to both U Nu
and Ne Win’s economy

INDONESIAN CHINESE

Chinese investments make up for 75% of Indonesia’s private sector

investment in the 1970s. This provided the necessary capital to
support Indonesia’s forays into the export oriented (open) industry

ACCELERATED ECONOMIC GROWTH → EXPERTISE & CAPITAL

The role of Asiatic communities was crucial as they contributed to the

acceleration of economic development/growth of Southeast Asian countries
through the expertise and capital they provided.

BURMA (INDIANS)

Existed in the financial industry (banking and money lending

industries) since British colonial rule. Also became clerks,
professionals and civil servants.

Their importance was seen when their removal from Burma caused
a drain on capital and expertise which was detrimental to both U Nu
and Ne Win's economy

INDONESIA (CHINESE) (SUHARTO)

Provided capital ~75% of private sector investment in the 1970s

Economic Development 13
 Private sector dominated by huge Chinese-owned conglomerates
privileges that let them grow → conglomerates provide investment to
help government meet industrialisation goals

INCREASING rich-poor gap → only a small minority benefited →

LACK OF EQUITY

MALAYSIA (CHINESE)

Owned 85% of the private-sector capital in Malaysia → ensured that

Malaysia's embrace of EOI was complemented by sound private
sector capital through the expertise provided by the Chinese
business community

THAILAND (CHINESE)

Leadership and expertise in banking, import-export businesses and

industrialisation

Assimilated into Thai culture, thus eliminating the danger that the
would be singled out by the rest of the populace in pursuit of
economic nationalism

REMAINED DOMINANT DESPITE DISCRIMINATORY POLICIES

In addition, in spite of some government policies which generally privilege
the majority population, the Chinese communities continued to remain
dominant in these countries.

MALAYSIA (CHINESE)

Malaysian Chinese capitalising on their expertise in benefitting from

the advantages enjoyed by the lesser experienced Malay community
as a result of the NEP in what was informally known as the Ali-Baba
partnership.

SINGAPOREAN CHINESE IN 1963 MERGER

Merging into Malaysia in 1963 meant that the Chinese community in

Singapore became a minority in a country whose political landscape
was dominated by the UMNO ultras.

Despite the tumultuous conditions, the Chinese community

maintained its prowess which put it in good stead to lead
Singapore’s economy when the merger between them failed to
materialise

Economic Development 14
 → Expertise and knowledge by the non-indigenous minorities were essential in
ensuring the success of countries in achieving economic growth and nationalism
→ expertise and knowledge formed the skeleton of the businesses and
industries in these countries enabled them to achieve success in economic
development

FOREIGN AID & INVESTMENT

In addition, foreign aids will provide the necessary heads start for ailing
Southeast Asian economies reeling from the effects of war and
decolonisation.

In addition, foreign state actors in the form of foreign governments also

played a crucial role in the economic development of independent Southeast
Asian countries when they provided necessary aid needed for these newly
independent states to kick-start their economic pursuits.

POLITICALLY-MOTIVATED (THE COLD WAR!!)

USA

REPUBLIC OF VIETNAM (1955-1975)

US$16.8million → Military Aid

US$8.5million → Economic Aid

This was during the Cold War period to enhance South

Vietnam's defence and economic solidarity in the Second Indo-
Chinese War (Vietnam War) against Communist North Vietnam

THAILAND (1950-1975)

US$1billion → Military Aid

US$650million → Economic Aid

This was during the Cold War period to shore up Thailand's

defence and economic solidarity in the face of increasing
communist aggression in Indo-China. As a result, this not only
enhanced Thailand defence capabilities, but also provided the
necessary capital for it to kick-start its economic reforms

USSR AND/OR PRC

DEMOCRATIC REPUBLIC OF VIETNAM (NORTH)

1955-1965: $90million

Economic Development 15
 1965-1975: $400million

SUKARNO'S INDONESIA (1957-65)

Sukarno's rejection of the aid from the West → styled himself as the
leader of the Non-Aligned Movement (NAM)

$1billion → Military Aid

$215million → Economic Aid

AID FROM JAPAN

US$3353million (1980) in donations to SEA countries provided the

necessary capital to revive its generally ailing economy which was
already ailing from the devastation caused by the Japanese Occupation
and their decolonisation process

AID FROM MULTILATERAL ORGANISATIONS (IMF & WB)

IMF AID: US$17.2billion rescue package for Thailand during AFC (1997)

Aid and Conditions of Reform for Indonesia (1997)

REGIONAL & TECHNOLOGICAL DEVELOPMENTS

Furthermore, global and technological developments created job opportunities

for locals which would ensure increased productivity and a contented
population.

GREEN REVOLUTION

Development of high yielding variety of crops eg rice: IR8

Philippines: from 3.9million tons (1961) to 7.9million tons (1981)

Malaysia: 120% improvement in yield between 1954 & 1970

SINGAPORE

There was a boom in the electronics industry from 1970s-80s which

Singapore capitalised through '2nd Industrial Revolution' (1979) →
created both employment and a skilled workforce which enhanced
Singapore's economic growth while also attaining economic nationalism.
Trend also followed by Malaysia & Thailand

MALAYSIA

Malaysia became one of the world's largest exporters of semiconductors

and one of the largest exporters of single-unit conditioners, textiles and

Economic Development 16
 footwear.

120% improvement in yield between 1954 & 1970 → The boom in the
electronics industry from 1970s-80s

As a result, manufacturing accounted for 60% of export revenue in 1990,

as compared to just 20% in 1980

GLOBAL DEVELOPMENTS

CAPITAL-INTENSIVE INDUSTRIES (EG ELECTRONICS) → 1970S

ONWARDS

Benefited countries with largely skilled workforce (eg Singapore) →

Rendered heavy industry in Vietnam and Burma obsolete (Agricultural
products → backwards) → finding difficulty in re-training their workforces
and replacing industrial equipment

Growing importance of the private sector (eg Singapore) leveraged

various advantages to offer banking and financial services &
emphasised tourism

INDONESIA

Indonesia, as a major oil exporter, benefited greatly from the oil crises of
1973 and 1979 → the price of oil rose sharply on both occasions

The Green Revolution also helped Indonesia achieve self-sufficiency in

rice production

ECONOMIC GROWTH
ECONOMIC GROWTH

ECONOMIC EQUITY

ECONOMIC NATIONALISM

YES!

COUNTRIES WHICH EMBRACED CAPITALISM → CATAPULTED THEIR

COUNTRIES' ECONOMIC GROWTH
Indeed, post-independence economic landscapes in some Southeast Asian
states have been characterised by economic dynamism as seen by

Economic Development 17
 governments which embraced capitalism hence catapulting their countries’
economic growth.

VIETNAM (POST-1986)

Vietnam’s embrace of Doi Moi meant that there was a greater

outreach to the international community by lowering trade barriers.
From 1989 onwards, Vietnam entered serious negotiations with
ASEAN and UN to its occupation of Cambodia: this arrangement
restored Vietnam’s international restoration.

Vietnam also ended its failed agricultural collectivization by

encouraging privatization of the agricultural sector starting 1988. As
a result, per capita rice production rose from 242kg (1987) to 293kg
(1989).

Vietnam became the world’s third-largest rice exporter after the US

and Thailand with rice exports more than doubling from 0.91million
(1988) to 1.95million (1992).

Its entry into ASEAN in 1995 and the lifting of the trade embargo by
the US the year before saw a rise to 8.2% per annum in GNP
growth.

THAILAND

The reign of Sarit (1957- 1963) and Thanom (1963-1981) saw the
emphasis on EOI with the emphasis on the more indirect role of the
government and increased privatiSation.

Other reforms included:

i. The appointment of highly trained technocrats,

ii. The establishment of government agencies to run these programs

such as the National Economic Development Board (1959)

iii. The three stages of National Economic Development Plans (1961-

1976) saw
the growth of Thailand’s economy by an average of 7.2% per annum
(1958-1973).

ACHIEVED EQUITY

SINGAPORE

Economic Development 18
 Singapore’s emphasis on meritocracy since independence negated
the spread of practices such as nepotism and cronyism.

In addition, the established of the Corrupt Practices Investigation

Bureau (CPIB) meant that malpractices which prevented the fair
distribution of income ensured that equity was achieved.

PHILIPPINES

In the initial years of Marcos, there was growth due to his focus on
producing high-yielding varieties of rice, chemical fertilisers and
irrigation techniques which resulted in increased productivity from
1961%

Under Aquino, economic growth was 6.7% and 5.5% in 1988 and
1989. Foreign aid in the form of Multilateral Aid Initiative (MAI) in
1989 and 1991 raised US$6.7.

Under Ramos, his comprehensive economic programs included:

i. privatising inefficient state owned enterprises such as Philippine

Airlines

ii. implementing ‘Philippines 2000’ which sought to enter

Philippines into the NICs (Newly Industrial Countries)

iii. Granting foreign investors 100% ownership in Philippines

companies.

MALAYSIA
As of 1971, ownership of the economy was 63% foreign, 34% non-
Malay and less than 3% Malay: highlighting

i. Malaysia’s reliance on foreign investments

ii. Income gap between Malaysia’s ethnicities NEP was implemented

with the target of:

i. reducing foreign share to 30%

ii. Increasing Malay share to 30%

iii. Raising Chinese share slightly to 40%

Outcome:

i. Foreign share fell from 63% to 33%

Economic Development 19
 ii. Non-Malays share increased from 34% to 47%

iii. Malay share rose to 20%

Significant reduction in
poverty from 49% to
15%.

ACHIEVED ECONOMIC NATIONALISM

SUKARNO'S INDONESIA

Upon his ascension to power, Sukarno’s government immediately

took over the Dutch enterprises.

This created economic nationalism but it wasn’t a productive

decision because the takeover of 300 Dutch plantations, 300 firms in
mining, trade, finance and utilities devastatingly compromised the
country’s expertise and investment.

VIETNAM POST-1986

Embracing openness and allowing privatization and the international

market to function within Vietnam does not necessarily meant that
the locals were compromised.

Vietnam remained a communist state and still maintained

stranglehold over 50% of the country’s state-owned industry.

SINGAPORE

The establishment of labour agencies such as the National Trades

Union Congress
(NTUC) and government bodies like National Wages Council
brought together employers, employees and government to ensure
a cohesive and stable work climate as well as addressing the needs
of various parties.

NO!

LACK OF EQUITY
However, economic dynamism cannot be used to describe post-
independence Southeast Asian economic landscape because the dynamism
that was brought about did not translate into equity for the population.

PHILIPPINES

Economic Development 20
 Magsaysay’s attempt at creating equity through the Philippine Land
Act (1955) wasn’t properly implemented because of the opposition
of the illustrado-dominated Congress.

This condition of inequity was worsened by Marcos’ corrupt regime

which practised cronyism which caused foreign indebtedness to rise
from 6.6% to 49.4% (in 1983)

VIETNAM

While there was general growth, there was still the issue of inequity
as seen by how between 1993 and 1998, more households in North
Vietnam were in poverty as compared to the South.

COLLAPSE IN AFC
Furthermore, economic dynamism could not be used to describe the post
independence economic landscape as seen by how the supposedly dynamic
capitalistic structures collapsed dramatically during the Asian Financial
Crisis.

SUHARTO'S INDONESIA

The government pursued the ISI by building up its domestic

industrial base by investing in basic industries such as steel and
concrete and implementing protectionism.

As a result the economy prospered in the 70s with an annual

average of 70%.

The government’s decision to embrace EOI in the mid 1980s meant

that there was increased privatization which created more
employment thus resulting in a GDP growth of 7% in the 1990.

Manufactured exports grew from less than US$1 billion (1982) to

US$9 billion in 1990.

CHAVALIT'S THAILAND

February 5th, 1997 was the date that Somprasong Land, a Thai
property developer, announced that it had failed to make a
scheduled $3.1 million interest payment on an $80 billion eurobond
loan, effectively entering into defaulting (inability to pay the loan).

Noticing similar patterns involving other property developers, It was

at this point that currency traders began a concerted attack on the

Economic Development 21
 Thai currency, the baht.

SOCIALIST MODEL → CONTRASTED ECONOMIC DYNAMISM

Furthermore, post-independence economic landscape had also been

characterised by countries which embraced the rigid socialist model which
therefore was a contrast to economic dynamism.

BURMESE WAY TO SOCIALISM (NE WIN)

The Burmese Way To Socialism saw the nationalisation of most

major industries by 1965 (by 1960, the government controlled 60%
of manufacturing and 90% of legal trade) while also dictating what
should be grown/produced.

As a result, rice exports dropped from the already low percentage of

42% (of exports earning) in 1962 to 14.9% in 1972.

The rise of the black market industry to provide consumer goods

was so ‘phenomenal’ that by the 1980s, they made up 70%-80% of
the goods traded in main cities in Burma.

VIETNAM PRE-1986

The government’s highly centralised implementation of the planned

economy included processes of collectivisation of agriculture from
mid- 1977 were ideologically driven and faced resistant from
peasants especially from the South.

Nationwide rice production fell from 11.83million tons (1976) to 9.79

million (1979).

THIRD WAY → DYSFUNCTIONAL AND FAILED

The decision of some leaders to adopt a third-way economic structure that
was dysfunctional highlighted how economic dynamism didn’t define the
post independence economic landscape in Southeast Asia.

U NU'S BURMA

An example of the failure of the pyidawtha was when state-owned

boards such as State Agricultural Marketing Board (SAMB) failed to
enhance rice production which was Burma’s main export.

This was worsened by the drop in the global price of rice by 25%
between 1955 and 1956

Economic Development 22
 SUKARNO'S INDONESIA

The manufacturing sector which was protected and most focused

upon by Sukarno’s government made the smallest contribution to
the economy in 1960.

As a result, demand for Indonesia’s products dropped domestically

and internationally as seen by the drop in the value of the exports
from US$931 million (1959) to US$685million (1966).

Inflation was at 1500% (between June 1965 and 1966)

Economic Development 23