Comment on “The Southeast Asian Economies in the Age of Discontent”

• Author: Chalongphob Sussangkarn
• Published date: 01 July 2020
• DOI: http://doi.org/10.1111/aepr.12310
• Date: 01 July 2020

Comment on “The Southeast Asian Economies

in the Age of Discontent”

Chalongphob SUSSANGKARN†

Thailand Development Research Institute

JEL codes: F02, F60, H12, Z18

Accepted: 15 February 2020

In recent years, one can see the emergence of a radically different economic policy par-

adigm, whose key characteristics include a rise of illiberalism, anti-globalization move-

ments, populism, economic nationalism and the emergence of democratically elected

authoritarian leaders, particularly President Donald Trump. Basri and Hill (2020) pro-

vide an excellent succinct review of the economic contexts that have led to the emer-

gence of these characteristics, which, thus far, seem to affect the advanced economies

more than developing economies. The main focus of Basri and Hill (2020) is on 5 Asso-

ciation of Southeast Asian Nations (ASEAN) middle income economies, and the ques-

tion whether these economies may also slide toward illiberalism, and if not, what kind

of policies and reforms are needed to support these countries’continued development.

In general, I agree with Basri and Hill that the ASEAN economies will not back-

track into illiberalism. ASEAN economies are mostly export oriented economies, so

they benefit from open trade regimes. Extreme populism, economic nationalism and

elected authoritarian leaders are different. In Thailand, “we have seen it all before.”

The most widespread economic nationalism phase occurred as a result of the Asian

financial crisis and the role of the International Monetary Fund (IMF). Through mone-

tary mismanagement, Thailand became insolvent in mid-1997 and had to enter an

IMF supervised program. While recovering from insolvency is bound to be painful,

critics of the IMF program pointed to a number of issues, such as the harsh nature of

the tight fiscal and monetary policies without due regard for social or political conse-

quences, imposition of full guarantees for creditors of financial institutions, and the

imposition of relatively rapid (fire sale type) structural reform measures. As it turned

out, the large depreciation of the Baht led to a rapid turnaround of the current

account. Foreign reserves rose quickly and by mid-1999 Thailand no longer needed to

make further drawings from the IMF package, and as a result, there was no need to

implement IMF conditionality. Thus, structural reforms measures were not fully

implemented, and in hindsight, given their controversial nature, it would have been

better not to have the structural reform conditionality. In any case, the Thai (and other

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

Ramkhamhaeng 39, Wangthonglang District, Bangkok 10310, Thailand. Email: chalongp@tdri.or.th

212 © 2020 Japan Center for Economic Research

doi: 10.1111/aepr.12310 Asian Economic Policy Review (2020) 15, 212–213