What this lesson teaches
I can judge which factors, at home and abroad, did most to shape economic change in Southeast Asia.
Syllabus 9174, Paper 2, Theme II, Learning Outcomes. evaluate the factors shaping economic change in different contexts and over time
Make a guess
Southeast Asian economies grew at very different speeds after independence. What do you think did most to explain the difference?
- Governments' choices of economic strategy.
- Luck, since governments followed the same plan.
- Climate, since hotter countries grew more slowly.
Show the answer
Governments' choices of economic strategy.
Strategies ranged from Burma's state socialism to Singapore's welcome for foreign investment, and outcomes diverged.
Governments chose strategies ranging from state socialism to welcoming foreign investment. Their choices did more than anything else to explain why economies diverged.
Every government set economic aims, but strategies differed. Some relied on the state to run the economy. Others used the state to support private and foreign businesses.
Singapore's government planned growth carefully. Its Economic Development Board, set up in 1961, attracted multinational companies. The state also built industrial estates and public housing, and it ran companies through Temasek Holdings, set up in 1974.
Indonesia under Suharto relied on economists trained in the USA, often called the "Berkeley Mafia", to control inflation and attract investment. It used oil revenues from the 1970s to build schools, roads and rice programmes.
Malaysia's New Economic Policy used the state to raise Malay ownership and incomes. It created state enterprises such as PERNAS (1969) and the national oil company Petronas (1974).
Burma chose state socialism. After 1962 the government nationalised business, closed the economy to the world and ran it badly. By 1987 the UN classed Burma as one of the world's least developed countries.
- EDB
- Singapore, 1961.
- Temasek
- Singapore, 1974.
- Petronas
- Malaysia, 1974.
- Burma
- Classed by the UN as least developed, 1987.
Real examples to use
Singapore: EDB, 1 August 1961
The Economic Development Board, first chaired by Hon Sui Sen, courted foreign manufacturers. Temasek Holdings, set up on 25 June 1974, took over 35 state companies.
Malaysia: Petronas, 17 August 1974
The national oil company gave the state control of oil and gas revenue to fund the New Economic Policy.
Vietnam: Doi Moi, December 1986
After inflation reached 775 per cent in 1986, the party congress switched to market reforms. Growth then averaged around 8 per cent a year from 1990 to 1997.
Worked example: Comparing strategies
How did government strategies differ?
- Singapore: state-led and open to multinationals.
- Indonesia: technocrats plus oil revenue.
- Malaysia: growth with ethnic restructuring.
- Burma: closed state socialism.
Watch out for this
More government intervention always meant slower growth.
Singapore's government intervened heavily, but in support of markets and investment. Burma's intervention failed because it shut out markets and investment.
Check your understanding
What did Singapore's Economic Development Board do?
- It nationalised the main industries and ran them for profit.
- It attracted multinational companies to invest in Singapore.
- It ran rice farms and fisheries.
Show the answer
It attracted multinational companies to invest in Singapore.
Right. It drove export-led growth.