Great Transformations

Abstract

Since the Second World War, surprisingly few developing countries have experienced a truly sustained episode of economic and social convergence towards the structural characteristics of the advanced nations. The region of the world that has gone the furthest in that convergence is East Asia. Much has been written on comparative industrialization and development in North East Asia but relatively less on South East Asia. This book focuses on the latter and, more specifically on Malaysia, Indonesia, and Thailand. These three nations have all undergone a major transformation-in a way never anticipated-from being poor, agrarian countries to middle-income countries that have developed an industrial and manufacturing base. The 'puzzle' that flows from that achievement is as follows: how did MIT achieve such a transformation, and how did they achieve the transformation with a form of economic growth that was driven by structural transformation, but that was also 'inclusive'? Given that historically it has been thought that structural transformation tends to push up inequality, whilst inclusive growth necessitates static or even falling inequality, this last point is particularly salient to developing countries. Understanding how the transformation was possible in a relatively short space of time, the extent to which it was inclusive, and the caveats and prospects for South East Asia is thus an area of enquiry significant to all developing countries as they seek economic and social transformation.