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Success as Trap? Crisis Response And Challenges To Economic Upgrading in Export-Oriented Southeast Asia

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  • Doner, Richard
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    Abstract

    This paper explores the capacities for sustained growth in the export-oriented countries of Southeast Asia, with a focus on Vietnam, Malaysia and Thailand. The paper is especially concerned with the prospects for "upgrading" and moving beyond the "middle-income trap" in Malaysia and Thailand. But the core argument for all three countries is similar: Each has responded relatively well to economic crises with impressive reforms, especially in areas of property rights, macroeconomic policies, and, to varying degrees, financial supervision. With some exceptions, however, reforms have not extended to improving local (indigenous) competitiveness and technological capacities. These limits reflect both successful adjustment in areas noted earlier and the availability of resources, including commodity export revenues, external aid, and migrant / informal labor. The danger is that such "safety valves" will serve to reinforce existing institutional and political arrangements, thus undermining initiatives to improve local competitiveness and linkages so key to upgrading. Of particular interest is the fact that, unlike Western European countries where external exposure and vulnerability have led to various forms of labor incorporation, and unlike in the East Asian NICs, where such vulnerability has led at least to a commitment to shared prosperity (and in Singapore to a peak union's participation in labor market and productivity decisions), labor has remained largely disorganized and excluded from bargaining over key issues in export-oriented Southeast Asia. This argument in turn reflects the contention that crises vary in nature and intensity, that different crises have different impacts on the willingness and capacity of political elites to promote new coalitions and to foster new forms of coordination (i.e. institutions), and that such institutions are especially important for movement into more innovation-based activities and higher income status.

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    File URL: http://hdl.handle.net/10685/76
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    File URL: http://repository.ri.jica.go.jp/dspace/bitstream/10685/76/1/JICA-RI_WP_No.45_2012_2.pdf
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    Bibliographic Info

    Paper provided by JICA Research Institute in its series Working Papers with number 45.

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    Date of creation: 30 Mar 2012
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    Handle: RePEc:jic:wpaper:45

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    Keywords: economic upgrading ; middle-income trap ; crisis ; labor ; capacity ; Southeast Asia;

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    1. Suiwah Leung & James Riedel, 2001. "The Role of the State in Vietnam's Economic Transistion," International and Development Economics Working Papers idec01-1, International and Development Economics.
    2. Manuel Agosin, 2007. "Export Diversification And Growth In Emerging Economies," Working Papers wp233, University of Chile, Department of Economics.
    3. Cavallo, Alberto F. & Cavallo, Eduardo A., 2010. "Are crises good for long-term growth? The role of political institutions," Journal of Macroeconomics, Elsevier, vol. 32(3), pages 838-857, September.
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    8. Hill, Hal, 2000. "Export Success Against the Odds: A Vietnamese Case Study," World Development, Elsevier, vol. 28(2), pages 283-300, February.
    9. Prema-chandra Athukorala, 2011. "Growing with Global Production Sharing: The Tale of Penang Export Hub," Departmental Working Papers 2011-13, The Australian National University, Arndt-Corden Department of Economics.
    10. Shahid Yusuf & M. Anjum Altaf & Kaoru Nabeshima, 2004. "Global Production Networking and Technological Change in East Asia," World Bank Publications, The World Bank, number 14918, October.
    11. Dirk Willem Te Velde & Theodora Xenogiani, 2007. "Foreign Direct Investment and International Skill Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 83-104.
    12. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
    13. Eduardo A. Cavallo & Alberto Cavallo, 2008. "¿Son Buenas las Crisis para el Crecimiento a Largo Plazo? El Papel de las Instituciones Políticas," Research Department Publications 4590, Inter-American Development Bank, Research Department.
    14. Shahid Yusuf & Kaoru Nabeshima, 2009. "Tiger Economies Under Threat : A Comparative Analysis of Malaysia's Industrial Prospects and Policy Options," World Bank Publications, The World Bank, number 2680, October.
    15. Irmen, Andreas, 2004. "Extensive and Intensive Growth in a Neoclassical Framework," CEPR Discussion Papers 4266, C.E.P.R. Discussion Papers.
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