Issues of industrial policy in East Asian countries: in view of the experience of Japan's industrial policy around the age of rapid growth

Abstract

In this paper, the issues of the industrial policies of the ASEAN countries will be examined, especially Thailand, Malaysia, the Philippines and Indonesia. These countries are dynamically developing their industrialization process following the spectacular growth of the Asian NIES.

World attention has come to focus on the remarkable economic growth of the ASEAN countries characterized by the expansion of exports of industrial products. However, on closer examination, their industrial development is such that conversion from the import-substitution phase to the full export-oriented phase is still incomplete. The international trade climate is shifting towards trade liberalization, as exemplified by the agreement on the ASEAN Free Trade Area (AFTA) in January 1992, development of APEC which advocates open regional cooperation and progress of GATT Uruguay Round. Determining a new direction for the former import-substitution industries is expected to become a major industrial policy issue among ASEAN countries.

What types of policy measures are needed to cope with these industrial policy issues? The authors wish to present one optional idea based on the experience of Japan's industrial policy during the post-war decades. A special effort has been made in this paper to analyze desirable forms of governmental policy intervention that avoid excessive intervention and its "arbitrariness," as this has widely been pointed out as negative effects of industrial policy approach.