POL202(6) Handout - Economic Development of the"Emerging...

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Economic Development of the “Emerging Newly Industrializing Economies” The ENIEs – Malaysia, Thailand and Indonesia In Southeast Asia, the dominant economic alliance is between multinational firms and the state’s politicians, bureaucrats, and their urban business allies. Similar to the NIEs in combining bureaucratic-authoritarian rule with market economies, there are, however, three (3) aspects that distinguished the ENIEs from the NIEs: A) Abundant natural resources have allowed the ENIE governments of Malaysia, Indonesia and Thailand to rely on exporting their primary products to generate foreign earnings, and hence resulted in the late shift from import substitution to export-oriented industrialization only in the early 1980s B) The ENIEs have relied extensively on foreign direct investments by multinational corporations to achieve economic growth, with the result that a sizeable slice of each country’s manufacturing, mining and forestry industries is controlled or owned by foreign interests C) The role of the overseas Chinese – their business experience, capital, skill, and contacts - has been pivotal in the economic development of the ENIEs, although they often had to ally themselves to the local ruling elites, agreeing to a subordinate role in return for the protection and enhancement of their economic wealth Indonesia’s economic development during the Suharto “New Order” has oscillated between periods of state intervention and liberalization. State intervention in the economy was particularly active when oil prices were high in the 1970s and Indonesia was a washed with foreign earnings. The decline in oil revenues after 1981 led economic technocrats to argue for diversification to create a more attractive environment for foreign investment. The government allowed for tax holidays, profit repatriation, and loans to be given to foreign investors. Japan, the other NIEs, and lately China, has taken an interest in Indonesia’s primary resources, especially timber, petroleum and natural gas.
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