Emerging States at Crossroads (Emerging-Economy State and International Policy Studies)

This book is open access under a CC BY-NC-ND license. This volume analyzes the economic, social, and political challenges that emerging states confront today. Notwithstanding the growing importance of the 'emerging states' in global affairs and governance, many problems requiring immediate solutions have emerged at home largely as a consequence of the rapid economic development and associated sociopolitical changes. The middle-income trap is a major economic challenge faced by emerging states. This volume regards interest coordination for technological upgrading as crucial to avoid the trap and examines how various emerging states are grappling with this challenge by fostering public-private cooperation, voluntary associations of market players, and/or social networks. Social disparity is another serious problem. It is deeply rooted in history in the emerging states such as South Africa and many Latin American countries. However, income distribution is recently deteriorating even in East Asia that was once praised for its high economic growth with equity. Increasing pressure for political opening is another challenge for emerging states. This volume argues that the economic, social, and political problems are interwoven in the sense that the emerging states need to build political consensus in order to tackle the economic and social difficulties. Democratic institutions have not always been successful in this respect. Keiichi Tsunekawa is Visiting Professor of the National Graduate Institute for Policy Studies (GRIPS) and Yasuyuki Todo is Professor of Economics, Waseda University Preface Contents Contributors Abbreviations 1 Emerging Challenges for Emerging States 1.1 Middle-Income Trap? 1.1.1 Early Debate Concerning Development and Underdevelopment 1.1.2 Globalization and Issues Concerning Emerging States 1.1.3 How to Cope with the Middle-Income Trap? 1.2 How to Cope with Social Disparity 1.2.1 Early Views on Social Disparity in the Developing Countries 1.2.2 Financial Crisis and Reformulation of Welfare Mechanisms 1.2.3 Sustainability of the New Social Welfare Schemes 1.3 Pressures for Political Opening 1.3.1 Early Debate Concerning Democratization in the Developing Countries 1.3.2 The Third Wave and Its Demise 1.3.3 Toward a Greater Political Uncertainty 1.4 Can Politics Manage Economic and Social Difficulties? References Middle-Income Trap and Beyond 2 Responses to the Middle-Income Trap in China, Malaysia, and Thailand 2.1 Rethinking the Middle-Income Trap 2.1.1 Studies on the “Middle-Income Trap” 2.1.2 Several Questions About the Discussion of the Middle-Income Trap 2.1.3 From “the East Asian Miracle” to “Innovative East Asia” 2.2 Higher Wages and Lower Labor Productivity 2.2.1 End of the Low-Cost Advantage Era 2.2.2 Labor Productivity in East Asia 2.3 Innovation and R&D in East Asia 2.3.1 R&D Activities in Asian NIES, ASEAN Countries, and China 2.3.2 Strategies to Avoid the Middle-Income Trap 2.4 Cases of China, Malaysia, and Thailand 2.4.1 China: ADB Policy Options 2.4.2 Malaysia: From “National Vision Plan” to a “New Economic Model” 2.4.3 Thailand: Pursuing Thai-ness and Next-Generation Industries 2.5 The Role of the State in New Challenges References 3 The Middle-Income Trap in the ASEAN-4 Countries from the Trade Structure Viewpoint 3.1 Middle-Income Trap and the ASEAN-4 3.1.1 Arguments of MIT for East Asia 3.1.2 How Slow Is the Rate of the Trap Threshold? 3.1.3 Historical Growth of the ASEAN-4 3.2 The Flying Geese Pattern from the NXR 3.2.1 Explanation of the FGP 3.2.2 FGP in Trade Structure 3.3 Export Structure of the ASEAN-4 3.3.1 Malaysia 3.3.2 Thailand 3.3.3 Indonesia 3.3.4 The Philippines 3.4 Why Has Industrial Upgrading in the ASEAN-4 Stalled? 3.4.1 Resource Curse Hypothesis 3.4.2 Lack of Homegrown MNCs in the Manufacturing Sector 3.4.3 Two Alternative Approaches to Industrialization 3.5 Conclusion References 4 Emerging States in Latin America: How and Why They Differ from Their Asian Counterparts 4.1 Different Economic Performance 4.2 First-Order Causes: Competitiveness of Manufacturing Industries 4.3 Second-Order Causes: Political Economy 4.3.1 R&D and Education 4.3.2 Fixed Capital Formation 4.3.3 Capacity to Coordinate 4.3.4 Intraregional Transaction 4.3.5 Effectiveness of Public Administration 4.4 Root Causes: Historical Legacies 4.4.1 High Inequality and Weak Trust 4.4.2 Weak Intraregional Business Networks 4.4.3 Public Administration of Average Quality 4.4.4 High Consumption, Low Investment 4.5 Conclusion References 5 Economic and Political Networks and Firm Openness: Evidence from Indonesia 5.1 Hypotheses and Estimation Methods 5.1.1 Benefits of Globalization 5.1.2 Linkages Between Protectionism, Business and Political Networks, and Trust 5.1.3 Estimation Method 5.2 Data 5.2.1 Survey 5.2.2 Variables 5.2.3 Summary Statistics 5.3 Estimation Results 5.3.1 Benchmark Results 5.3.2 Alternative Measure of Political Ties 5.3.3 Discussion 5.4 Conclusion References 6 Industrial Technology Upgrading and Innovation Policies: A Comparison of Taiwan and Thailand 6.1 Evolution of Manufacturing Industries in Taiwan and Thailand 6.1.1 Taiwan 6.1.2 Thailand 6.2 A Comparison of Taiwanese and Thai Policy Instruments Supporting Technology Upgrading and Innovation 6.2.1 Tax Incentives 6.2.2 Grants 6.2.3 Loans 6.2.4 Equity Financing 6.2.5 Capital Market Funding 6.3 Institutions Affecting Policy Formulation and Implementation 6.3.1 Unity and Capability of Government Bureaucracy 6.3.2 Perception of the Role of Government in Strengthening Private Firms 6.3.3 Corruption and Attitudes Toward Corruption 6.3.4 Laws, Regulations and Norms 6.3.5 Entrepreneurship 6.3.6 Trust 6.4 Conclusion References 7 Changing Resource-Based Manufacturing Industry: The Case of the Rubber Industry in Malaysia and Thailand 7.1 Outlook of the Rubber Industry in Malaysia and Thailand 7.2 Development of the Rubber Industry in Malaysia 7.2.1 Upstream Segment 7.2.2 Midstream Segment 7.2.3 Downstream Segment 7.3 The Development of the Rubber Industry in Thailand 7.3.1 Upstream Segment 7.3.2 Midstream Segment 7.3.3 Downstream Segment 7.4 Discussion and Implications References 8 Marketing Risks and Standards Compliance: Challenges in Accessing the Global Market for High-Value Agricultural and Aquacultural Industries 8.1 Marketing Risks: Pineapple Exporting Industry in Ghana and Thailand 8.1.1 Pineapple Industry in Ghana 8.1.2 Pineapple Industry in Thailand 8.2 Standards Compliance: Export Shrimp Aquaculture in Vietnam and Thailand 8.2.1 Shrimp Industry in Vietnam 8.2.2 Shrimp Industry in Thailand 8.3 Conclusion References Social and Political Dimensions 9 How Nations Resurge: Overcoming Historical Inequality in South Africa 9.1 South Africa as an African Middle-Income State 9.2 The Land Question and the History of Inequality 9.3 The Rise of the “Black Middle Class” 9.4 Reform Deferred 9.5 Conclusion: Addressing Both Pressing Issues and Root Causes References 10 Education, Development, and Politics in South Korea 10.1 The Park Chung-Hee Framework for Human-Capital Development 10.1.1 Initial Stage: Expansion of Middle-School Education 10.1.2 Heavy and Chemical Industry: Expansion of Upper Secondary Education 10.1.3 Higher-Education Zeal and the Demand for Technical Experts in the Late 1970s 10.2 Science and Technology Development and Human Capital in Higher Education 10.2.1 Advancement to Science and Technology Development 10.2.2 Corporations’ Demands and Students’ Responses in the 1980s 10.3 Democratization and Bloated Higher Education 10.3.1 Transition to Democracy and Economic Liberalization 10.3.2 Transformation of University Policy and Swelling Higher-Education Enrollment 10.4 Enterprises and University Students in the Globalized Economy 10.4.1 Changes in the Economic Structure After the Asian Financial Crisis 10.4.2 The Dual Labor Markets and the Oversupply of University Graduates 10.5 The Government’s Limited Response to Imbalanced Human Resources 10.5.1 Successive Governments’ Responses to Economic Disparity 10.5.2 Development and the Institutionalization of the Political System 10.6 Conclusion References 11 Politics of Inequality in Indonesia: Does Democracy Matter? 11.1 Poverty and Inequality in Indonesia 11.2 Social Policies in Indonesia 11.3 Budget Allocations to Social Sectors 11.4 Budgetary Politics Under Indonesia’s Democracy 11.5 Politics of Fuel-Subsidy Cuts Under the Yudhoyono Presidency 11.6 The Rise of Populist President and Redistribution 11.7 Conclusion References 12 Civil-Military Relations in an Emerging State: A Perspective from Indonesia’s Democratic Consolidation 12.1 Military Politics Under Democratic Consolidation 12.1.1 Yudhoyono’s Military Management 12.1.2 Preservation of the TNI’s Vested Interests 12.1.3 MOOTW and the War on Terrorism 12.2 Civil-Military Relations Under the Jokowi Presidency 12.2.1 Jokowi’s Military 12.2.2 Politics of Gatot 12.3 Conclusion References 13 Democratization and the Military in Thailand 13.1 Bhumibol Regime at Bay 13.1.1 Birth of a Regime 13.1.2 Decline of the Regime 13.2 The 2006 Coup and the Rise of the “Tigers of the East” 13.2.1 Thai Military in Politics 13.3 A Coup on September 19, 2006 13.4 Rise of the 2nd Infantry Division and the 2014 Coup 13.4.1 Rise of the 2nd Infantry Division 13.4.2 The 2014 Coup and “Transition” 13.5 Political Prospects 13.5.1 Assertive Monarch 13.5.2 Fighting Against Democracy for the Monarchy References Index 469946_1_En_14_Chapter_OnlinePDF.pdf Correction to: Emerging States at Crossroads Correction to: K. 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