25 - Is There a Southeast Asian Development Model?

Summary

INTRODUCTION

Now into its 47^th year, the Association of Southeast Asian Nations, ASEAN, is the most durable and effective regional economic and political grouping in the developing world. This raises the question, does it make sense to contemplate the existence of a ‘Southeast Asian development model’?

The approach adopted in this paper is two-fold. The first is to enquire whether the Southeast Asian economies are in some sense converging with respect to development policies, strategies and outcomes. Second, to the extent that there is such convergence, is there any causality at work that is derived from common geographic location.

The paper focuses primarily on eight of the countries, excluding Brunei because it is so small and atypical, and Myanmar because of the poor quality of its statistics.

GROWTH

The growth record is first examined to get a sense of whether there is any sort of synchronised growth pattern discernible.

First, the three Indo-China latecomers, led by Vietnam, have actually grown the fastest. This is not surprising, as they commenced growth at extremely low levels of per capita income, and were less affected by the Asian financial crisis (AFC). Second, the Philippines remains an outlier (along with Myanmar if reliable national accounts statistics were available), both before and after 1990. Third, apart from the Philippines, the growth dynamics of the original ASEAN Five have been broadly similar over this period.

These diverging growth rates are unsurprising. First, the experience with major departures from trend growth rates, principally economic crises, have varied enormously, reflecting both the differing responses to common exogenous shocks, and the presence of home-grown crises. Second, commodity price fluctuations have different effects within the region. Third, a range of other country-specific factors is at work. Localised political disturbances are also a factor, such as in Cambodia and Indonesia in 1998 and the Philippines in 1986.

More importantly for the purposes of this paper, are the region's growth cycles synchronised? Putting aside the outliers, Brunei and Myanmar, the coefficients are quite high, especially in the case of pairs of countries where intuition suggests similar growth drivers. In fact, for the ASEAN Five, with the partial exception of the Philippines, practically all the bilateral coefficients are high, suggesting deepening integration.