Two-Tier Developmentalism in South East Asia
In this chapter, we consider the ‘miracle’ in its heady heyday of exceptionally fast growth rates and structural transformation from the mid 1980s to the eve of the Asian financial crisis in the mid to late 1990s. We argue for a simpler explanation of rapid growth and structural transformation in this period in South East Asia. That is, that changes in international prices—the global oil price shock—induced a crisis. Then a new form of developmentalism evolved which opportunistically took advantage of another change in global prices—national exchange rates vis-à-vis the US dollar and yen, and global versus national interest rate differentials—to trigger, respectively, large inflows of foreign direct investment and finance capital. These inflows were attracted by what the first era of developmentalism had built in infrastructure, financial systems, and human capital, and drove growth and employment until the exchange rate advantage diminished.
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