Information about Asia and the Pacific Asia y el Pacífico

8 Mobilization of Resources from East Asian Newly Industrialized Economies and ASEAN Countries

Claire Liuksila
Published Date:
December 1995
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Information about Asia and the Pacific Asia y el Pacífico
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Mitsuhiro Sasanuma

For sub-Saharan African countries, assistance provided by newly industrialized economies (NIEs) and ASEAN countries may be more effective than assistance provided by Japan or other developed countries. This is because the applicability and usefulness of the technologies of NIEs and ASEAN countries in a developing country have already been proven, and most of them are readily applicable in other developing countries.

The same is true of systems or institutional frameworks developed by NIEs and ASEAN countries. They might offer better models than those of developed countries. Examples are Korea in the area of rural development, Taiwan Province of China in small-scale industry development, Singapore in infrastructure development, Malaysia in privatization of power companies and other public entities, Thailand in agricultural credit or other agricultural support systems, Indonesia in the leadership provided by the National Development Council (Bappenas), and the Philippines in the education system (especially private education).

Such technologies, know-how, or systems are considered to be hybrids with wide applicability in developing countries. They are immune to various industrial “pests,” are resilient to natural disasters and social problems, and guarantee quality as well as quantity in production and success in operation. In the case of systems, they have been developed taking the difficult conditions in developing countries into consideration. Their usefulness and effectiveness have been demonstrated, and they are well able to counter adverse side effects.

Today, not only technical resources but also financial resources from NIEs and ASEAN countries are becoming significant. Therefore, more meaningful trilateral cooperation—not only involving Japan and NIEs/ASEAN, but also combining resources of other developed countries/international organizations and NIEs/ASEAN—is possible.

Where economic development in East and South East Asian countries is concerned, their macroeconomic management is universally highly rated. The importance of their well-designed, strong government leadership (of which economic management is a part), however, is not recognized.

In areas of economic development policy other than macroeconomic management, the following measures have been successfully implemented in Japan and in several East Asian countries.

Institutional lending, which is fairly distributed and effectively used for business development, complements commercial lending without creating any distortion for the development of small-scale private lending institutions.

Infrastructure building (including industrial estates) by local/regional governments is useful to attain balanced development of the country. In most East Asian countries, major industrial estates are built by governments. In Japan, government-private joint ventures, called “the third sector,” are responsible for most industrial estate development.

In Japan, unlike other countries, government support has been provided for privatization of state-owned enterprises to enable enterprises to rationalize their organization, strengthen their management and technical capability, and improve their financial position while remaining government-operated so that they may continue to be successful after they become independent of government. Thanks to such measures, most state-owned enterprises have been successfully transformed into private entities in Japan. This is not the case in other countries. The goal of privatization should not be limited to cutting the budgetary burden of state-owned enterprises or capital gains, but to make state-owned enterprises operationally efficient and successful.

In Japan, assistance for small- and medium-scale enterprises (SMEs) is given to help growing industries and to remove obstacles to their development. Research and development support is the most typical measure to assist their growth.

Of particular significance are East Asian countries’ well-coordinated policy measures for industrial development and financial sector modernization. Through such measures, strengthening of the financial sector has contributed to industrial development. In many developing countries, although international assistance may have improved their financial sectors, the improvement has not yet resulted in industrial development. Financial infrastructure is as important as physical infrastructure for the development of a country, and its improvement is not meaningful unless it contributes to the industrial development of the country.

In addition to the above-mentioned technical aspects, the success story of the NIEs and ASEAN countries is useful in that it provides development milestones for all developing countries. In several ASEAN countries, such as Malaysia and Singapore, where the governments provide strong leadership, privatization is most advanced. Conversely, in a country where the leadership provided by the government is weak, privatization does not progress well. This may be because private investors are willing to invest only if the government can be relied upon to act consistently and provide effective leadership. In Japan and the NIEs, privatization has progressed remarkably well thanks to the right kind of government participation. Paradoxically, experience shows that it is necessary to strengthen government to promote privatization. The policy of promoting privatization to compensate for weak government will never pay off.

For African development, both financial and technical-human resource mobilization from India would seem to be a promising approach because India has had long-standing economic and social ties with African countries. India is now succeeding in developing its economy, modernizing the bureaucracy and its organizations, deregulating complex and obsolete institutional setups, and stimulating industry. India’s experience has much to offer African countries. For maximum promotion of trilateral cooperation, India’s involvement might well be vital.

The only ASEAN member country that seems to have been left behind by the East Asian miracle is the Philippines. So far, the Philippines has not fully achieved a “miracle” in economic development. However, it has abundant useful technological resources and much knowledge that can be mobilized to assist other developing countries. For example, there are many able consultants and contractors in the Philippines whose capabilities are world-class. Also, the governmental Technology and Livelihood Resource Center has been producing a large number of useful education programs for small and cottage industries and for farmers and fishermen. The Asian Institute of Management, which is almost wholly operated by Philippine nationals, is deemed as the best school for development studies in Asia. It is hoped that these resources could also be helpful for sub-Saharan Africa.

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