Private business, dynamic development and economic reform: the Southeast Asian experience

Abstract

UNTIL the early 1980s, many Southeast Asian countries had clung to an import substituting, industrialisation, strategy and remained restrictive in trade and foreign investment policies. Protection of domestic industries under this strategy has made possible the proliferation of inefficient public enterprises. The role of market forces and the domain of private business in fostering dynamic economic growth and development was substantially circumscribed. This phenomenon was partly the result of the momentum effect of the prevailing postwar development strategy employed by most other developing countries. Economic independence with a dominant public sector, in the form of an active government's role in the economy, backed up by a large public enterprise sector and a complex regulatory machinery, was deemed a necessary extension of the struggle for political independence from former colonial powers by the newly independent nations. In particular, in a number of Southeast Asian countries, during the colonial period, local oligarchies and foreign colonial interests often have put priority on the development of agriculture, livestock production, the exploitation of natural and mineral resources, international trade and banking' at the expense of social justice, manufacturing and industrial development.