From Commodity Booms to Economic Miracles: Why Southeast Asian Industry Lagged Behind

40 Pages Posted: 27 May 2015

See all articles by Jean-Pascal Bassino

Jean-Pascal Bassino

Ecole Normale Supérieure (ENS) de Lyon; Lyons Institute of East Asian Studies

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus; Honorary Fellow, University of Wisconsin - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: May 2015

Abstract

Except for the Philippines between 1896 and 1939, Southeast Asia was never part of the century-long East Asian industrial catching up until after World War II. Before the 1950s, Southeast Asian manufacturing hardly grew at all: while commodity export processing did grow fast, import-competing manufacturing and manufacturing for local consumption did not. Singapore and Thailand started recording catching up growth rates on the western leaders only from the 1950s onwards, and Indonesia and Malaysia joined the club only after 1973. Even then, Southeast Asia did not record catching up growth rates on Japan or Taiwan until after 1973 and 1990, respectively. The only Southeast Asian country that appeared to have joined the fast industrial growth club before World War II – the Philippines -- had its industrial growth collapse after the ISI years. What explains this dismal industrial performance before the 1960s? Why did Southeast Asia become a rapid export-led manufacturing growth success story after the 1960s while it did not in Latin America, the Middle East, or South Asia? In seeking answers, we distinguish four periods: de-industrialization and commodity export growth before 1913; a modest diversification into manufacturing during WWI and the interwar years; the development of consumer goods production under import substitution policies between the 1940s and the 1960s; and finally the high speed export-led industrialization since. We show how factor endowments, demography, schooling, second-best institutions, foreign markets, and, especially, good luck mattered.

Keywords: history, Manufacturing growth, Southeast Asia

JEL Classification: F14, L60, N65, O14

Suggested Citation

Bassino, Jean-Pascal and Williamson, Jeffrey G., From Commodity Booms to Economic Miracles: Why Southeast Asian Industry Lagged Behind (May 2015). CEPR Discussion Paper No. DP10611. Available at SSRN: https://ssrn.com/abstract=2610726

Jean-Pascal Bassino (Contact Author)

Ecole Normale Supérieure (ENS) de Lyon ( email )

15, parvis Rene Descartes BP 7000
Lyon Cedex 07, 69342
France

Lyons Institute of East Asian Studies ( email )

15 Parvis René Descartes, BP 7000
Lyon, Cedex 69342
France

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus ( email )

Littauer Center
Room 216
Cambridge, MA 02138
United States
617-495-2438 (Phone)
617-496-7352 (Fax)

Honorary Fellow, University of Wisconsin - Department of Economics

716 Langdon Street
Madison, WI 53706-1481
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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