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