Organizer: Alasdair Bowie, The George Washington University
Chair: G. William Skinner, University of California, Davis
Discussant: Gary G. Hamilton, University of Washington
The state centric focus of many explanations for rapid economic development of capitalist Southeast Asia has obscured the pivotal role played by Asia's dynamic capitalists. This panel redresses the balance by exploring the participation of individual entrepreneurs and business groups in the "reciprocal process of managed exchange" (Wade) that is development policymaking.
Not since 1991 has an annual meeting panel focused explicitly on the politics of economic development in the region. In the intervening years rapid economic expansion in Thailand, Malaysia and Indonesia has fostered the growth of a class of Asian capitalists that has become increasingly important in influencing the course of development policy, both sectorally and nationally. Rather than replicating the oft rehearsed assessment of "state strength," "state capacity," and "state autonomy," the panelists consider private sector individuals, groups and institutions in these three Southeast Asian countries, exploring the various ways in which they have wielded influence over development policy (broadly defined).
Ansil Ramsay and Richard Doner propose an innovative institutional framework for understanding Thailand's economic growth and for explaining the patterns of interaction between business groups, networks, commercial banks, business interest associations and state institutions there. Danny Unger provides the counterpoint, analyzing the manifest failure of Thai business leaders-and institutions representing their interests-to exercise significant leadership with respect to infrastructure development policy in the cases of the Eastern Seaboard project and Bangkok mass transit. Andrew MacIntyre writes on Indonesia, comparing the sectoral roles of business people in policymaking in industrial and non-industrial sectors. Alasdair Bowie provides a comparison of the Indonesian and Malaysian cases, contrasting the nature and extent of domestic capitalist influence in formulating national responses to changes in the international economy.
The approach shared by all these papers parallels and is informed by a burgeoning literature that is reevaluating the private sector's role in shaping the economic development policies of capitalist developmental states (e.g., Samuels, Okimoto, Friedman, Dore). Our panel offers a timely opportunity for those interested in political economy to take stock of the nature and extent of that role in the Southeast Asian context.
Richard F. Doner and Ansil Ramsay, St. Lawrence University
For the past three decades, Thailand has had one of the most rapidly growing economies in the world. This growth has been accompanied by rapid diversification and considerable success in exporting a wide range of products. In some industrial products, such as sugar and garments, Thailand has become one of the world's leading exporters. Both industries have experienced remarkable growth. Thailand did not begin exporting sugar until 1960 and garment exports did not begin until the 1970s. This success leads to a major puzzle: How did Thailand achieve such economic success during a time of economic stagnation or decline in many other less developed countries?
Two contending approaches to solving the puzzle dominate much of the present literature. One is the state centered approach with its emphasis upon developmental states, and the other is the neoclassical approach with its emphasis upon market conforming policies. We find neither approach fully satisfactory for explaining Thailand's rapid growth, and seek to move beyond the debate over the relative importance of state versus market. We suggest that an inclusive institutionalist approach offers a more satisfactory explanation of Thailand's economic success. Rather than focusing attention upon the critical importance of a single institution, such as a developmental state or the market, this approach draws attention to the importance of several non-state institutions and non-market institutions and their interactions to explain economic growth. It also emphasizes the significance of a hierarchy of institutions. Of overarching importance are the institutional structure of the state and the central institutional linkages between the state and economic society. These overarching institutional patterns condition and shape the behavior of lower level institutions such as business groups, networks, commercial banks, and business interest associations.
We suggest that Thailand's economic success in recent decades has depended upon an ensemble of institutions, of which the two most inclusive are a bifurcated state and fragmented clientelism. These two institutional arrangements provided the overall context within which private commercial banks and networks of Sino Thai businessmen nourished the efforts of individual entrepreneurs to build business groups in the sugar and garment industries.
Danny Unger, Georgetown University
The capitalist economies of Southeast Asia diverge from the model of the capitalist developmental state in part because many of the functions of economic governance are handled by private rather than public institutions. In Thailand, for example, there is some evidence that private business groups have played central roles in rationalizing the textile industry, promoting exports, and fashioning agreements between local and foreign capital. Can these same business groups successfully deal with more traditional state economic functions such as providing physical infrastructure? The evidence from Thailand, both from the Eastern Seaboard infrastructure and the Bangkok mass transit projects, raises considerable doubts on this score.
This paper examines the policymaking process in Thailand during the inception and implementation of plans to develop infrastructure and heavy industry along the Eastern Seaboard, Southeast of Bangkok, and the subsequent efforts to design and implement mass transit schemes in Bangkok. These sets of plans were unprecedented in Thailand in the scale of their ambitions and envisioned business actors assuming unprecedented tasks at a time when fiscal constraints precluded the state taking on these projects on its own. The subsequent policy record, however, was marked by confusion, delays, and rising costs. The private sector in Thailand was unable to organize itself in a fashion that would enable smooth and rapid implementation of these critical projects. This paper explores the links among private business groups, to parties, individual politicians, and to business interest associations and suggests that the lack of organization within the private sector as a whole impedes effective economic governance in the broadest developmental tasks.
Andrew MacIntyre, University of California, San Diego
We know very little about the dynamics of policy making in Indonesia. The traditional picture is one which emphasizes the dominant role of bureaucrats, with business people featuring in the story only as cronies involved in patron client relationships. More recently a number of writers (e.g. Wibisono, Chalmers, MacIntyre) have highlighted business associations as an emerging force in economic policy processes. Other writers (e.g. Robison, Winters) have emphasized the wider structural constraints of local and international capital on policy making.
One fundamental reason for the thin literature in this area is the dearth of empirical material. Moreover, such empirical evidence as we have is confined almost exclusively to the modern industrial sector. But, plainly, if we are to satisfactorily explain the politics of economic growth, we need to cast our net much wider. What have been the dynamics of policy making in the mining sector, in agriculture, and in services? Has the role of business people, or more broadly, entrepreneurs, varied significantly across sectors and time? Do we find significant variation in sectors or industries in which foreign capital or state enterprises loom large?
This paper will be a first cut at exploring these issues. It represents the preliminary steps in a wider a study on the politics of rapid economic growth in Indonesia. In addition to drawing on sources on Indonesia to address these questions, the paper will explore the utility of empirical and theoretical work from other Southeast and Northeast Asian countries.
Alasdair Bowie, The George Washington University
Facing an international environment of unparalleled opportunity, as foreign investors clamor to invest in Malaysia, Thailand and Indonesia and as Southeast Asian manufactures find ready markets in North America, Japan and western Europe, state officials and private entrepreneurs in the region are challenged to formulate a domestic response. This paper explores the outlines of this response in two cases, contrasting the character and scope of private sector involvement in economic policy formulation in Indonesia and Malaysia.
While the principal actors who make policy are still state officials (politicians, military officers, bureaucrats), capitalist entrepreneurs and the organizations that represent them have come to play increasingly important roles in the past decade in both countries. Besides making formal-and less important-policy contributions, their actions and reactions to official policy, and their participation in informal networks seeking to influence state policy represent an essential element in the "reciprocal process of managed exchange" by which development policy is made.
The Indonesia Malaysia comparison is particularly illuminating because in both cases official policymakers and domestic capitalists are for the most part from different ethnic backgrounds (compounded, in the Indonesian case, by distinctions of religion, region and military nonmilitary background). Efforts to have coalitions linking public and private interests coalesce around particular national development strategies are complicated by such ethnic suspicions and anxieties. The paper argues that divergence in the policy role of capitalists in Indonesia and Malaysia can best be explained with reference to differing institutional characteristics of the states and private sectors in the two cases.
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