W9 - ASEAN Flashcards
How did Singapore start?
Was kicked out of Malaysia in 1959. Lee Kuan Yew started the nation with 2 million people
What percentage of global trade goes through the Singapore straight?
30%
Who was Singapore inspired by?
Was inspired by Israel by linking itself to the US and Europe and it’s reception of FDI. An oasis.
How did Singapore co-ordinate it’s policies?
Using the Economic Development Board (EDB) in 1961 to coordinate policy
What did Singapore do about it’s lack of highly educated population?
It hired the smartest bureaucrats and let them run
What is Singapore’s general attitude to foreign companies?
Didn’t matter if local people or foreigners created jobs as long as they could create jobs and raise living standards so they just opened their arms to receive FDI. They let foreigners from developed train locals and were therefore not viewed as a threat but welcomed
What were Singapore’s growth strategies?
- Promote itself as a foreign investment destination
- State ventures undertaken directly
- Use MNCs to create jobs and import new technologies to train locals
How were MNCs welcomed?
- Singapore did not nurture private local firms
- MNCs led manufacturing exports as the engine of growth (1970-1979)
- State had control over wages and labour to maintain competitiveness and trade unions were banned
- Tax incentives
Where did the savings come from?
High savings and investment were the key through MNCs and state ventures
What did Malaysia invest in to try and kickstart its own development?
Heavy industries (steel), cars (relied on Mitsubishi technology rather than learning the technology to advance)
What were Malaysian growth ambitions based on?
Look East (attempting to benchmark Japan and Korea by sending technocrats there)
Why did Malaysia fail to replicate the success of South Korea?
- Leadership failed to make full use of domestic human and entrepreneurial resources failing to align them with development priorities
- Not as much pressure on bureaucrats
- Later Malaysia began to adopt a more Singaporean style approach
How did the economy of Vietnam look between 1975 and 1985?
Centrally planned Soviet style economy with 80% of the economy in agriculture
Why did the Proton car company fail?
Because Proton was given too much domestic protection (Malaysia didn’t have much domestic competition) whereas South Korea let them compete domestically.
What happened in 1986 to Vietnam’s economy?
Reform with the goal of creating a socialist oriented market economy
What have been the three different types of development in this course and who has adopted each one?
KEY: There are at least 3 models of economic development in Asia: [Japan, Korea, Taiwan]; [China, Vietnam]; [Hong Kong, Singapore]
Technocrats, Socialist-market economy, City state (MNCs, Financial Hubs)
Why was investment higher than savings in Vietnam?
Lots of foreign investment
What is Vietnam’s ER mechanism?
It now has a market based fixed band ER system but aims to maintain a stable exchange rate within a set of bands relative to a basket of currencies with which it trades the most
Why was a depreciation for ASEAN countries currencies bad for their economies emprically?
This depreciation was not beneficial in South East Asia as they did not have big manufacturing bases and they import lots of consumer products. The price of these goods became more expensive adding to inflation.
When a currency depreciates, it puts upwards pressure on inflation as foreign goods become more expensive
What made ASEAN countries currencies vulnerable/ highly volatile?
Falling oil and commodity prices from a Chinese slowdown cause depreciation of currency influenced by natural resources such as Indonesia. Exports gain somewhat but not enough to offset the drop. The depreciation causes inflationary pressure as imports become more expensive and foreign debt (denoted in US dollars) becomes more expensive making countries more vulnerable to US interest rate changes
