RAPID ECONOMIC GROWTH IN SOUTH EAST ASIAN

Boosting Savings & Investment for Rapid Economic Growth in South East Asian



Boosting Savings and Investment for Rapid Economic Growth in South East Asian

Section-I

Introduction

Approximately half the growth in emerging markets has its origins in Asia. Indonesia deserves the attention of investors, not for the prospects in terms of consumption, but for its raw materials (coal and oil in particular). Malaysia, the most developed country in the region, displays more than satisfactory economic performance (about 7% growth expected this year). Nevertheless, the heavy reliance of firms towards political power is a ticking time bomb. Indeed, these markets are only accessible through funds or ETFs. Yet they often operate asset allocation on an entire continent, not a particular country.

Impact of Investment on South East Asia

An important direction of expansion of foreign economic relations in the region along with foreign trade has become an international movement of capital, especially foreign direct private investment. The annual growth rate of the latter, to be placed in these countries have achieved between 1970-2001 is 13.6% which was more than twice higher than the corresponding growth rates of aggregate GDP equal to (in constant 1995 prices) 6.0%. Because of this, if in 1970, the economy of Southeast Asia has been invested in the form of foreign direct private investment of $374 million in 1999, while under the influence of crisis in the late 1990's, their volume fell as reached in 2003. (Trebbi, 2007)

In 1970, the share consideration of investments made in these countries accounted for 3.4% of their global average. But already by 1996, the proportion of new foreign direct private investment in the economy of Southeast Asia rose to 7.9%. However, under the influence of this crisis, their share in all the international flow of investment has decreased to the initial level of 3.4%. (Trebbi, 2007)

Because of their rapid development, they have been referred to as “Asian miracles,” which is justifiable especially if their transition is compared to the experiences of other countries. Initially, many South East Asian economies were not very different from underdeveloped African countries in terms of gross domestic product (GDP) per capita, but their phenomenal growth enabled them to surpass the relatively wealthy South American economies and get close to the living standards in Western Europe and North America. Moreover, in only a few decades, South East Asian economies experienced a development that took the United States and Western Europe more than 100 years. (Trebbi, 2007)

Goal of the Study

The goal of this study is to provide a review of the various determinants of growth and development in South East Asian in general and in Malaysia, Indonesia, Thailand and Singapore in particular. At first, the role of the two main factors of production, capital and labor, is examined. Next, the debate on the contributions of total factor productivity to growth is presented, followed by a discussion of additional growth components, including historical determinants, trade, and exchange rate policies. The last section deals with the origins and ...