Comment on “Connectivity in East Asia”

• Published date: 01 July 2016
• Author: Chalongphob Sussangkarn
• DOI: http://doi.org/10.1111/aepr.12133
• Date: 01 July 2016

Comment on “Connectivity in East Asia”

Chalongphob SUSSANGKARN†

Thailand Development ResearchInstitute

JEL codes: F15, F13, O14, O19

Brooks (2016) provides an overview of the relationships between connectivity improvements

andtradeandinvestmentflows,focusingmainly on East Asia. Connectivity improvements,

whether in terms of infrastructure, logistics, information and communication technology

(ICT), and finance, have widen production choices leading to the development of fragmented

production, supply chains, and trade and foreign direct investment (FDI) flows. East Asian

economies, in particular, through their export-led development strategies, have developed

to become the main manufacturing hubs for the whole world. Firms take advantage of

improved connectivity to design their production strategies in terms of product

fragmentation, geographical locations, sourcing, and investment distributions. This has

contributed to the dynamism of the East Asian region, with diverse patterns of trade and

investment flows and fast growth, although the effectiveness of export in driving growth

has declined somewhat since the global financial crisis.

Generally, Brooks (2016) is informative. However, there could have been more

discussion of the policy aspects of connectivity development and how this serves the

development strategies of countries and/or groups of countries. Improving connectivity

can require costly investment, so when the projects are carried out they must fit into the

perceived need of the countries carrying them out. Sometimes the projects relate directly

to facilitating trade and investment, but other projects may serve other connectivity

objectives, depending on the circumstances and need of the country at the time.

Take the case of Thailand.Back in the late 1950s and early 1960s, there was a high risk

that Thailand could become the next domino, succumbing to communism. The main

priority at that time wasto raise rural incomes, particularly in areas adjacent to Thailand’s

communist neighbors (Cambodiaand Lao PDR). The first 5-yeardevelopment plan (1961–

1966) stressed road building into the rural hinterlands in order to open up new land for

agriculture and increase rural incomes. So the need at that timewas on improving internal

connectivity to integrate rural areas into the national economy, and this was quite

successful.

Moving forward 20years to the mid-1980s, Thailand had become more integrated into

the global economy, with the degree of openness(ratio of export plus import of goods and

services to gross domestic product (GDP))reaching about 60% compared to about 40% in

mid-1960s. However, the exchange rate realignments following the Plaza Accord in 1985

†Correspondence: Chalongphob Sussangkarn, Thailand Development Research Institute, 565 Soi

Ramkhamhaeng39,Wangthonglang District, Bangkok 10310, Thailand. Email: chalongp@tdri.or.th

doi: 10.1111/aepr.12133 Asian EconomicPolicy Review (2016) 11, 195–196

©2016 JapanCenter for EconomicResearch 195

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