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Dr. Edo Andriesse, International College, Khon Kaen University, Thailand.

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Presentation on theme: "Dr. Edo Andriesse, International College, Khon Kaen University, Thailand."— Presentation transcript:

1 Dr. Edo Andriesse, International College, Khon Kaen University, Thailand

2 Is state capitalism a suitable recipe for overcoming Laos position in the economic and geographical periphery of Southeast Asia? How could development corridors not only lead to economic growth, but also to a reduction of inequality and social exclusion?

3 A.The two principal agents 1.Creating firms and building their capabilities 2. Creating pilot agencies to guide industrialisation B. Setting the process of capability enhancement in motion 1.Arranging for firms to access and leverage advanced knowledge 2. Promoting export-based engagement with the global economy 3. Targeting industries/technologies for initial import-substitution 4. Securing dynamic comparative advantages in leading sectors C. Creating an economic environment for capability development 1.Building broad-based education, from primary to tertiary education 2. Creating a catch-up friendly, but cautious financial system 3. Establishing stable macroeconomic settings 4. Gradual phasing out of non-market interventions Source: Lee and Mathews, 2010

4 Japan and South Korea complemented this with side payments to weaker parts in society: rice farmers, small and medium enterprises, regions lacking high growth industries and industries in decline. Income inequality is now relatively low in Japan and South Korea.

5 global rankcountry life expectancymean yearsexpected yearsGNI per capita at birth (years) of schooling (ppp 2008 U$) 27Singapore Brunei D Malaysia Thailand Philippines Indonesia Vietnam Timor-Leste Lao PDR Cambodia Burma Source: UNDP 2010

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7 Rehbein (2007: 72-73) While the habitus of most Lao is still firmly rooted in the rural past, it is now being exposed to radical changes and is under pressure to adapt to the market economy… And even if they succeed in adapting to the market economy, Lao often adhere to traditional conceptions of time, work, happiness and behavior that are hardly compatible with the spirit of capitalism.

8 provincepoverty headcount ratio adult literacy rate 15+ in / / / / 2008malefemale Lao PDR Vientiane capital Xayaboury Vientiane province Savannakhet Bokeo Huaphanh Sekong Source: UNDP 2009

9 by country by sector Thailand23.7Power generation53.9 China16.9Agriculture11.4 Vietnam9.3Mining9.8 Japan5.8Industry and Handicraft7.5 France5.7Services4.3 India4.8Trading3.8 South Korea4.7Construction2.9 Australia4.6Hotel and Restaurant2.6 Malaysia1.8Other activities3.7 Singapore1.4 Others21.3 Source: IMF 2009

10 Little employment generation Displaced citizens due to dam building and new mining sites Insufficient attention paid to small and medium enterprises (SMEs). For instance, there is no process of securing dynamic comparative advantages in the garment industry

11 Landlessness due to set up of large scale plantations. In Chinese rubber plantations in Northern Laos villagers usually receive 30% of the profits; the companies 70% (Shi 2008).

12 Dawei EWEC N-S Corridor High speed railway MawlamyineDanang Kunming

13 Institutional mismatch: ADB thinks of corridors in a Washington Consensus fashion whereas Lao PDR and other countries have more the BEST Consensus in mind; particularly the Chinese model. Cornford (2006) on EWEC: road improvements in Savannakhet have in fact led to higher inequality between relatively well off urban based Lao Loum people and relatively deprived rural Lao Theung people.

14 If really implemented, it will seriously reduce the likelihood of a successful EWEC as it makes the Mawlamyine deep seaport redundant. In that case Bangkoks position will be strengthened rather than peripheries in the GMS.

15 Is state capitalism a suitable recipe for overcoming Laos position in the economic and geographical periphery of Southeast Asia? Yes, but more attention should be paid to firms capabilities (especially SMEs) and side payments to disadvantaged groups in society More relation-based institutions are required (Bardhan 2005)

16 How could development corridors not only lead to economic growth, but also to a reduction of inequality and social exclusion? Focus more on productive aspects, for instance insertion in global value chains. Need for complementary social policies (notably education).


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