Foreign Investment and the Middle Income Trap in Southeast Asia

https://doi.org/10.22146/lembaran-sejarah.39859

David Henley(1*)

(1) Leiden University
(*) Corresponding Author

Abstract


This article focuses on the post-colonial catch-up by Southeast Asian nations with developed countries. The article offers an analysis of the nature and causes of the middle income trap in Southeast Asia. It discusses various interpretations of this concept, concluding with the dichotomy between laissez-faire and interventionist development strategies. Empirical evidence is provided from the automotive industry in Malaysia and Thailand. Two rival explanations of the lack of strong interventionist policies in Southeast Asia are given, one stressing the weakness of political pressure on national governments, the other linked up with historical patterns of ethnic specialization and division. The argument draws on secondary sources and reflects on implications for the study of Indonesian economic history in the colonial era.

Keywords


foreign investment; middle income trap; Southeast Asia

Full Text:

PDF


References

Abbott, Jason P. Developmentalism and dependency in Southeast Asia: the case of the automotive industry. London: Routledge Curzon, 2003.

Amsden, Alice. Asia’s next giant: South Korea and late industrialization. Oxford: Oxford University Press, 1989.

Booth, Anne. Review of The rise of ersatz capitalism in Southeast Asia by Yoshihara Kunio, Journal of Southeast Asian Studies, Vol. 22 No. 1, 1991, pp. 161-162.

Booth, Anne. Colonial legacies: economic and social development in East and Southeast Asia. Honolulu: University of Hawai’i Press, 2007.

Booth, Anne. ‘Southeast Asia: the half-way miracle?’, in: Martin Andersson & Tobias Axelsson (eds), Diverse development paths and structural transformation in the escape from poverty. Oxford: Oxford University Press, 2016, pp. 128-157.

Bowie, Alasdair. Crossing the industrial divide: state, society, and the politics of economic transformation in Malaysia. New York: Columbia University Press, 1991.

Busser, Rogier. ‘”Detroit of the East”? Industrial upgrading, Japanese car producers and the cevelopment of the automotive industry in Thailand’, Asia Pacific Business Review, Vol. 14 No. 1, 2008, pp. 29-45.

Chang, Ha-Joon. ‘More education in itself is not going to make a country richer’, in: Ha-Joon Chang (ed.), 23 things they don’t tell you about capitalism. London: Allen Lane, 2011, pp. 178-189.

Chu, Yin-Wah. ‘The Asian developmental state: ideas and debates’, in: Yin-Wah Chu (ed.), The Asian developmental state: reexaminations and new departures. New York: Palgrave Macmillan, 2016, pp. 1-25.

Dollar, David & Kenneth L. Sokoloff. ‘Industrial policy, productivity growth, and structural change in the manufacturing industries: A comparison of Taiwan and South Korea’, in: Joel D. Aberbach, David Dollar & Kenneth L. Sokoloff (eds), The role of the state in Taiwan’s development. Armonk, NY: M.E. Sharpe, 1994, pp. 5-25.

Doner, Richard F. The politics of uneven development: Thailand’s economic growth in comparative perspective. Cambridge: Cambridge University Press, 2009.

Doner, Richard F., Bryan K. Ritchie & Dan Slater. ‘Systemic vulnerability and the origins of developmental states: Northeast and Southeast Asia in comparative perspective’, International Organization, Vol. 59 No. 2, 2005, pp. 327-361.

Drabble, John H. An economic history of Malaysia, c. 1800-1990: The transition to modern economic growth. Basingstoke: Macmillan, 2000.

Gill, Indermit S. & Homi Kharas. The middle-income trap turns ten. Washington, DC: World Bank [Policy Research Working Paper 7403], 2015.

Goldstein, Andrea. ‘The political econommy of high-tech industries in developing countries: Aerospace in Brazil, Indonesia and South Africa’, Cambridge Journal of Economics, Vol. 26 No. 4, 2002, pp. 521-538.

Haggard, Stephen, David Kang & Chung-In Moon. ‘Japanese colonialism and Korean development: a critique’, World Development, Vol. 25 No. 6, 1997, pp. 867-881.

Hamilton, Gary. ‘Pariah capitalism: a paradox of power and dependence’, Ethnic Groups Vol. 2, 1978, pp. 1-15.

Henley, David. Asia-Africa development divergene: a question of intent. London: Zed Books, 2015.

Hill, Hal. Is there a Southeast Asian development model? University of Freiburg Department of International Economic Policy, Discussion Paper Series 26, 2014.

Jesudason, James V. Ethnicity and the economy: the state, Chinese business, and multinationals in Malaysia. Singapore: Oxford University Press, 1989.

Jomo K.S. ‘Chinese capitalism in Southeast Asia’, in: K.S. Jomo & Brian C. Folk (eds), Ethnic business: Chinese capitalism in Southeast Asia. London: Routledge Curzon, 2003, pp. 10-24.

Kang, David C.Crony capitalism: corruption and development in South Korea and the Philippines. Cambridge: Cambridge University Press, 2003.

Khan, Mushtaq H. Governance, economic growth and development since the 1960s. New York: United Nations Department of Economic and Social Affairs [DESA Working Paper 54], 2007.

Kharas, Homi & Harinder Kohli. ‘What is the middle income trap, why do countries fall into it, and how can it be avoided?’, Global Journal of Emerging Market Economics, Vol. 3 No. 3, 2011, pp. 281-289.

Kohli, Atul. ‘Where do high growth political economies come from? The Japanese lineage of Korea’s “developmental state”’, World Development, Vol. 22 No. 9, 1994, pp. 1269-1293.

Landon, Kenneth Perry. ‘The problem of the Chinese in Thailand’, Pacific Affairs, Vol. 13, No. 2, 1940, pp. 149-161.

Lim, Linda. ‘Southeast Asian business systems: the dynamics of diversity’, in A.E. Safarian & Wendy Dobson (eds), East Asian capitalism: diversity and dynamism. Toronto: University of Toronto Press, 1996, pp. 91-118.

Lin, Justin & Ha-Joon Chang. ‘Should industrial policy in developing countries conform to comparative advantage or defy it? A debate between Justin Lin and Ha-Joon Chang’, Development Policy Review, Vol. 27, No, 5, 2009, pp. 483-502.

McKendrick, David. ‘Obstacles to “catch-up”: the case of the Indonesian aircraft industry’, Bulletin of Indonesian Economic Studies, Vol. 28, No. 1, 1992, pp. 39-66.

Natsuda, Kaoru, Kozo Otsuka & John Thoburn. ‘Dawn of industrialisation? The Indonesian automotive industry’, Bulletin of Indonesian Economic Studies, Vol. 51, No. 1, 2015, pp. 47-68.

Natsuda, Kaoru & John Thoburn. ‘Industrial policy and the development of the automotive industry in Thailand’, Journal of the Asia Pacific Economy, Vol. 18, No. 3, 2013, pp. 413-437.

Park Chung-Hee. Korea reborn: a model for development. Eaglewood Cliffs, NJ: Prentice-Hall, 1979.

Reid, Anthony.The Indonesian national revolution,1945-1950. Hawthorn, Victoria: Longman, 1974.

Reid, Anthony.Southeast Asia in the Age of Commerce 1450-1680.Volume II: Expansion and crisis. New Haven: Yale University Press, 1993.

Riggs, Fred W. Thailand: the modernization of a bureaucratic polity. Honolulu: EastWest Center Press, 1966.

Robison, Richard. Review of Yoshihara Kunio, The rise of ersatz capitalism in Southeast Asia’, Bulletin of Indonesian Economic Studies, Vol. 25 No. 1, 1989, pp. 119-124.

Studwell, Joe. Asian godfathers: Money and power in Hong Kong and South-East Asia. London: Profile Books, 2007.

Studwell, Joe. How Asia works: success and failure in the world’s most dynamic region. London: Profile Books, 2013.

Tran Van Tho. The middle-income trap: Issues for members of the Association of Southeast Asian Nations. Tokyo: Asian Development Bank Institute [ADBI Working Paper 421], 2013.

Wade, Robert. Governing the market: Economic theory and the role of government in East Asian industrialization. Princeton: Princeton University Press, 1990.

Wade, Robert. ‘How can middle-income countries escape “gravity” and catch up with high-income countries?’, Halduskultuur, Vol. 9, 2008, pp. 12-29.

Wade, Robert. ‘Industrial policy in response to the middle-income trap and the third wave of the digital revolution’, Global Policy, Vol. 7 No. 4, 2016, pp. 469-480.

Warr, Peter G. ‘The Thai economy’, in: Peter G. Warr (ed.), The Thai economy in transition. Cambridge: Cambridge University Press, 1993, pp. 1-80.

Woo-Cumings, Meredith. ‘Introduction: Chalmers Johnson and the politics of nationalism and development’, in Meredith Woo-Cumings (ed.), The developmental state. Ithaca, NY: Cornell University Press, 1999, pp. 1-31.

World Bank. The East Asian Miracle: Economic growth and public policy. Oxford: Oxford University Press, 1993.

Yoshihara Kunio. The rise of ersatz capitalism in South-East Asia. Oxford: Oxford University Press, 1988.

Yoshihara Kunio. The nation and economic growth: the Philippines and Thailand. Kuala Lumpur: Oxford University Press, 1994.

Yusuf, Shahid & Kaoru Nabeshima. Tiger economies under threat: A comparative analysis of Malaysia’s industrial prospects and policy options. Washington, DC: World Bank, 2009.



DOI: https://doi.org/10.22146/lembaran-sejarah.39859

Article Metrics

Abstract views : 1797 | views : 1430

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Lembaran Sejarah

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.


ISSN 2620-5882(online) | © 2024 Lembaran Sejarah

View My Stats