Part 1: Economic Challenges

encountered by Southeast Asian states

Theme 2: Economic Development & Consequences

Syllabus guide: what is covered

Economic challenges encountered and strategies adopted to promote economic development Role of government in economic development Role of the different communities Asian Financial Crisis: causes You are supposed to: Examine the different strategies adopted by Southeast Asian countries to promote economic development Examine the role of the government in the economic development of Southeast Asian states Evaluate the role played by the different communities in the economic development of Southeast Asia Evaluate the causes leading to the Asian Financial Crisis in 1997

Overarching questions
What strategies did governments adopt to develop the economy? What challenges did Southeast Asian governments face whilst developing their country? Were the governments successful in achieving growth? nationalism? Equity? Have government interventions in the economies of Southeast Asia been a force of stability or instability? [Specimen Paper] Were the governments economic participation necessary? Without the alien communities, Southeast Asian economies would not be as successful as they are today. Comment.

Introduction
After WWII came independence, when SEA states were in a position to take control of their own destiny politically and economically Though there were challenges & obstacles, the new govts had to manage to hold the country together and think of ways to provide for the people which was their most urgent duty They had to experiment to find the right way: either adopting the Western model, abandoning colonial systems, or inventing a halfWestern-half-local structure And in the process, new problems appeared which threatened to derail the development of the economy and even country Modernisation seemed the most popular & successful strategy Aims: build strong and united countries via economic success - economic growth, equity and nationalism

CHALLENGES: HISTORICAL ISSUES

[i] Colonial legacy - reliance, poverty, lack of industrialisation, backwardness of agriculture, rising population, unskilled labours, unsustainability [ii] Damages of war [iii] Hindrances of decolonisation process

[i] Colonial Legacy of Exploitation & Dependence

Relationship between colonial master and the colonised: exploitation & dependence rather than cooperation Colonial govts selfish: lacked diversification: mainly agriculture & mining, e.g.: Mya 85% of export earnings from tin & rubber no industrialisation: feared competition with home economy extortion/uneven distribution: 70% of profits in Western hands and largely repatriated deliberate dependence: no official programmes for selfsufficiency/reliance e.g.: Great Depression revealed near-total reliance on economic system of Western demand, capital & technology average per capita income of Europeans in 1939 was 61 times higher than SEAsians collectively

[i] Colonial legacy of Exploitation & Dependence

Natives had little experience in business & economics industrialisation, global trade, profits There was no strong middle class of capitalists, no vibrant, sustainable economic environment, no structured entrepreneurial skills, no capital, no technology Little involvement other than agricultural work in commercial activities businesses mainly in the hands of foreigners - the few businessmen lacked the clout to provide commercial leadership in their community or country Traditional values and lack of confidence/education made them incapable of stepping out into business and dealing with competition & the demands of modern economy - eg: Malaya British policy of protecting locals in their traditional occupations immobilised them no training/experience in capitalist context Analysis: Foreign control and weak local entrepreneurship affected post-independence economic development

[ii] Post-War Situation of Destruction

WWII exploitation, damages & cost of reconstruction
e.g.: Burma and Philippines - worst-hit 80% of Manila was destroyed only Thailand was unscathed

Land & transport system damaged, death, food production dropped, forces requisitioned food, money system collapsed
e.g.: banana & Mickey Mouse money Greatest number of lives lost in Vietnam 1.2m

Lack of trade helped break imperial hold somewhat on the colonies

black market/barter trade/subsistence cultivation promoted selfreliance/independent spirit essential for survival

Weakened colonial powers e.g.: Britain could not provide decent economic assistance to Burma the Philippines was a lot more fortunate to have America later pay out compensations Analysis: More harm than good hampered economic development

[iii] Post-War Situation of Decolonisation

Decolonisation - colonial attitudes and policies were a hindrance Colonial govts still interested to benefit themselves
when independence was supposed to offer opportunities to undertake economic policies for local development and prosperity wanted to continue exploiting colonies for the rehabilitation of home economy mainly Dutch & French who used economic reconstruction as excuse to delay decolonisation - is this valid?

Post-colonial exploitation - eg: Philippines US made it sign unequal treaties in exchange for political freedom - demanding the same rights as citizens to natural resources + peg the peso to $ The French & Dutch Colonial fatigue: eagerness to depend on themselves eg: Burma and Indonesia nationalised/expropriated foreign properties CAN INDEPENDENCE SOLVE PROBLEMS OF POVERTY AND DEVELOPMENTAL BACKWARDNESS?

Conclusion: as Aung San once said

desired changes cannot be achieved by the stroke of a magic wand as I do not possess one

ECONOMIC AIMS OF INDEPENDENT STATES

[1] Economic growth increase national wealth [2] Equity a moralistic consideration: about the right of all to education, health care, etc [3] Nationalism - reduce foreign influence - indigenise wealth/production - self-sufficient Via - Central planning/state intervention - Restructuring - Expansion of industry - Discrimination against foreigners - Restrictions on foreign investment - Focus on heavy industry

CHALLENGES: NEW PROBLEMS

Corruption Cronyism Favouritism Mismanagement Public resentment Wrong economic direction and policies External events Protectionism Globalisation