Southeast Asia: Beyond Crises and Traps

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.