south east asia development 1a pptx

Economic Development of
Southeast Asia
Ian Coxhead
University of Wisconsin-Madison
1
Overview

Week 1: Early modern development

Historical background – initial conditions

Getting growth started: resources, industry, agriculture

“Old style” global shocks: oil crisis, 1970s

Income growth, poverty and distribution

Week 2: Development since mid-1980s

Post-Plaza Accord boom, bubble and bust

Globalization, again: trade liberalization and FDI

Enter the dragon: the rise of China

Topics: human capital, Asian regional integration, macro
policy
2
Approach and assessment

Lots of reading!   


Thinking about what we read:

2 short midweek homeworks @ 10%

Connections to data

1 big research assignment, using SE Asian economic growth
and development data @ 30%

Just checking…

2 end-of-week tests @ 20%

Having your say

Class participation @ 10%
3
1a Southeast Asia before the
modern era
4
5
6
Overview

Why study “ancient” history?

Precolonial SE Asia: the first globalization era

Colonialism


War, nationalism and revolution

The region about 1970: a snapshot
map
7
Why study ancient history?

Precolonial SEA has some remarkable similarities with contemporary
times:

Resource endowments relative to rest of world

Natural resource abundance

Importers of advanced technologies

Trade relationships

Esp. predominance of China & Northeast Asia

Vulnerability to world market shocks

Susceptibility to radical political and religious ideas

Of course, some differences too:

Then: labor shortage; now, mainly labor abundance relative to rest of
world
Is history fate?

map
8
Precolonial SE Asia (~1000-1600 AD)

Mainland, Java, Sumatra: centralized kingdoms with capitals
astride navigable rivers

Wealth based on local resource base and taxes on resource exports
(rice, spices, specialty timbers)

E.g. Ayuthaya (Thailand): about 25% gov’t revenue from taxes on
trade between hinterland and rest of world.

Major religions display strong centralizing tendencies

Archipelago/Malay peninsula: decentralized political entities,
capitals at coastal ports

Wealth based on resource exports and entrepôt trade between Red
Sea ports, India and China

Spread of Islam (a decentralized religion) along maritime trade
routes
9
10
11
Resource endowments

Labor-scarce, land-abundant economies


Slavery & quasi-slavery systems widespread & persistent

Many wars were primarily slave raids

Corvée and indentured labor under colonialism.

Open land frontiers (these weakened central authority)

Natural resource wealth

Abundant timber and cropland, plentiful & regular rainfall

Specific resource endowments of very high value (nutmeg, mace,
cloves, tin & other mineral resources)

Little reproducible capital and few commercial inst’ns

Main unit of production was the household

Manufactures and high-tech products largely imported (ceramics,
silk & painted textiles, navigational eqpt, paper)
12
Precolonial globalization

Trade with China, India, & Europe

Maritime Silk Route

European search for “Spice Islands”  voyages of discovery


Columbus (1492), De Gama (1498), Magellan (1521), …

Migration and cultural flows accompanied trade

Specialization & technology transfers

European trade  huge expansion of pepper & spice area,
intraregional trade in rice & other staples

Vulnerability to global shocks

Trade shocks: closure of China & Japan; European conflicts

Dependence of global trade routes on small numbers of entrepreneurs
(or on foreign MNCs, e.g. Dutch E. India Co.)
13
14
15
Summary: precolonial SE Asia

Resources: land abundance, labor scarcity.

Trade: diversified; regional and global.

Econ. structure: mainly diversified; subsistence-oriented;
low-tech (no capital).
“Southeast Asia … has always been an exporter of raw materials and an
importer of manufactures. Its own manufactures were significant items
of local trade, but … they were not needed in China or India, the two
populous manufacturing centers on its borders. It was the products of

tropical agriculture and horticulture… that received the greatest stimulus
from the trade boom… followed by forest products”
(Reid 1993:32).
16
Colonialism (17
th
century to ~1950s)

Econ. motives for colonial rule

Trade access to East Asia (Manila, Cochinchina as
bases/entrepots)

SE Asian natural resources (spices, timber, ag. produce,
minerals)

Treaty of Breda (1697): Dutch exchange an American colony
for Run Is., securing global monopoly on nutmeg

Trade and tax revenues to support colonial govt

Markets for European manufactures.

Strategic and political motives also important

inter-Euro competition for markets & influence (Portugal vs.
Venice, etc.).