Southeast Asian tiger economies earn their stripes

Southeast Asian tiger economies earn their stripes

The United Nations says the export-led growth model of
Southeast Asian tigers is a proven anti-poverty strategy.
Dipankar De Sarkar, in this Inter Press Service analysis, says
things are not that simple.

LONDON: This is becoming a familiar refrain: the booming
export-led tiger economies of Southeast Asia represent the way
forward for other developing countries burdened by recession and
low growth.

But the message -- centerpiece of this year's report of the
Geneva-based UN Conference on Trade and Development (UNCTAD) has
not convinced some experts.

UNCTAD advises developing countries the world over to learn
from the experience of the tigers and try to replicate their
export-led model. But it appeals for caution, stressing that
replication is not the same as cloning. But that has not blunted
reaction to its basic premise.

"There are lessons to be learnt from the nature of the East
Asian development models, but they were carried out by fairly
undemocratic regimes," said Mark Robinson of the Institute of
Development Studies in Sussex.

"The question then is that are these models transferable to
countries with democratic political setups?" he added.

Robinson points that talented Southeast Asian technocrats were
given complete political insulation in carrying out a clear set
of export-oriented economic policies. He doubted that the same
degree of autonomy can be enjoyed by technocrats in democratic
societies.

Some experts hold that the balance between technical
effectiveness and democratic accountability is bound to tilt one
way or the other, depending on how democratic a political
structure is.

"In India, some of the elements of the East Asian models are
applicable, but at the same time, it is impossible to insulate
policy makers there." said Robinson.

Analyst Martin Wolf, writing in the Financial Times recently,
noted: "If democracy is to be compatible with successful
development, the implementation of sensible overall policies must
be reconciled with the government's inescapable need to gain
support from the governed."

Questions remain also over how much of the tiger economic
model can be followed by the least developed countries, such as
the heavily indebted countries of sub-Saharan Africa.

The authors of the report insist that the model is workable in
all corners of the globe and in countries in any stage of
development: all they have to do or study the appropriate stage
in the development of the model Southeast Asian countries and
emulate the policies carried out then.

The trouble with such a prescription, many analysts hold, is
that it tends to ignore the history of Southeast Asian region,
and the fact that it benefited from American largess and was part
of a strategic umbrella under which it did not have to spend on
defense.

And a significant element of protectionism in their industrial
growth helped lay a strong foundation for industry. Such policies
are discouraged in the South in the 1990s.

The UNCTAD report said that in countries that had successfully
developed, both the public and private sectors reinforced each
other and state institutions were able to provide the market with
what it needed.

"We did not underrate the role of the market. What we did say
was to emphasize that in order for the market to play its role,
it needs support from an effective State," UNCTAD's Rubens
Ricupero told journalists in Geneva.

"The very high level of American aid to the region in the
1960s is often forgotten," said Robinson. "Is it fair to expect
others to gain success today? I would think there are very, very
few countries in Sub-Saharan Africa, for instance, who can
possibly follow the East Asian model."

Analysts point to the low level of technical capacity in most
African countries, which, coupled with their dependence on
international commodity prices, can make replication of
successful Asian models difficult to achieve.

But the authors of the UNCTAD report are adamant replication
works. "It is not only feasible, but also necessary," said Yilmaz
Akyuz, who headed the team that prepared the report, speaking at
the report's recent launching in London.

However, he predicted that commodity prices would level off in
the medium term after a rise in 1995 which saw a three percent
African growth and a ten percent increase in export earnings.

"There is considerable uncertainty for African growth," said
Akyuz. "If prices start to decline, Africa may not reach the per
capita income growth that we were hoping it will reach,"

"But we don't expect a major collapse. It's more an easing up
of commodity prices. A rise in prices could take years," he
added.

The very poor countries, he said, will have to move into
labor-intensive production. But their dependence on resource-
based exports and international commodity prices brought about
limitations.

For instance, while the North has committed itself to ending
the multi-fiber Arrangement that puts a limit on textiles exports
from Southern countries, Akyuz said it was difficult to see the
same kind of process happening in sugar.

"We don't expect Africa to replicate what Korea has been doing
for the last five years, but (to follow) Malaysia, Thailand and
Indonesia," he said.

"There are different lessons to be learnt from different
stages of industrialization," he added, pointing to Southeast
Asia's success with resource-based exports such as timber and
palm oil.

UNCTAD insist that for replication to work, the North must
keep its markets open and not get bogged down in attempts to keep
inflation down and cutting budgets.

Such inward-looking moves could trigger a slowdown in the
economy. That in turn may tempt Northern governments to impose
protectionist measures on Southern exports.

However, with low growth and high unemployment continuing to
characterize the recession-hit North, the authors of the report
are pessimistic about the possibilities of Northern economies
opening up their markets.

Additionally, they warn, if every Southern country -- or at
least the more industrialized among them -- began to push exports
all at the same time, they will probably flood the market, weaken
prices and end up damaging each other.

Given such a scenario, the best way out is for southern
countries to trade among them self. "Greater south-south
cooperation in trade could help overcome problems associated with
inadequate growth of and access to markets in the north," the
report says.

The prescription, not surprisingly, is the East Asian model
whose growth has been largely fueled by exports.

According to the report, the only bright spot in an otherwise
economically indifferent 1995 was, once again, the performance of
Asian countries, notably in Southeast Asia.

Per capita income the first tier of newly-industrialized South
East Asian countries South Korea, Taiwan, Hong Kong and Singapore
-- has risen at an average of nearly seven percent over the past
30 years.

A second tier comprising Indonesia, Malaysia and Thailand has
averaged annual growth of six percent for the last ten years and
a third tier is now emerging, led by China with a mercurial
growth rate of ten percent.

-- IPS