Economic Reform in ASEAN: Editors' Overview

• Author: Shujiro Urata,Hal Hill,Kazumasa Iwata,Takatoshi Ito,Colin McKenzie
• Date: 01 July 2020
• DOI: http://doi.org/10.1111/aepr.12312
• Published date: 01 July 2020

Economic Reform in ASEAN: Editors’

Overview

Hal HILL,

1

Takatoshi ITO,

2

Kazumasa IWATA,

3

Colin MCKENZIE

4

†and

Shujiro URATA

5,6

1

Australian National University, Australia,

2

Columbia University, USA,

3

Japan Center for Economic Research,

Japan,

4

Keio University, Japan,

5

Waseda University, Japan and

6

Japan Center for Economic Research, Japan

JEL codes: E20, E60, D70, D72, D73, E02, E2, 0E, 60, F02, F60, H00, H1, H3, H11, H12, O14,

O43, O53, P16, P18, P31, P48, Z18

1. Economic Reform in ASEAN

1

The world is richer in aggregate than ever before, global poverty is declining, infant

mortality is falling sharply, average life expectancy is rising, and global inter-personal

inequality is declining.

Yet these trends are not reflected in the various indicators of happiness, trust, and

political openness. The triumphalism that was evident as the Berlin Wall collapsed

over 30 years ago has not translated into a new, cooperative rules-based order of eco-

nomic and political liberalism. Instead, the world has witnessed the rise of authoritari-

anism, democratic retreat, populism, narrow nationalism, and ethnic conflict, and

rising intolerance of immigrants, especially illegal arrivals. A new cold war involving

the world’s economic and military superpowers is just as menacing as the old one was,

albeit taking different forms. Moreover, the global community appears unable to

undertake collective action on the many pressing issues, from climate change to multi-

lateral trade agreements and much else. The roller coaster of China–USA trade and

strategic disputation appears now to be a permanent feature of the global architecture.

The bitter strategic rivalry between the USA and Russia has resurfaced, as evidenced

by the imminent demise of the long-standing Strategic Arms Limitation Agreement.

The domestic manifestations of this discontent are diverse and country-specific. In

Donald Trump’s USA, it is an assault on independent organs of a functioning civil

society at home, including the judiciary, the media, and the scientific community,

together with aggressive unilateralism and mercantilism abroad. In the UK, it has been

the assertion of national sovereignty and opposition to governance from Brussels.

China, the world’s incoming superpower, under “president for life”Xi Jinping, appears

to becoming less open politically. Russia’s embrace of a pluralistic democracy has been

Hal Hill was a Guest Editor for this issue of the journal.

†Correspondence: Colin McKenzie, Faculty of Economics, Keio University, 2-15-45 Mita, Tokyo

108-8345, Japan. Email: mckenzie@z8.keio.jp

© 2020 Japan Center for Economic Research 165

doi: 10.1111/aepr.12312 Asian Economic Policy Review (2020) 15, 165–184

short-lived, while xenophobic nationalism is on the rise again in several post-

communist Eastern European states. A controversial authoritarian populist now also

rules Brazil, Latin America’s largest country.

The diagnosis of these ills is equally diverse, but there are common elements. Stig-

litz (2019) articulates the argument that in rich countries such as the USA socio-

economic grievances are the central cause. The interpersonal inequality of incomes,

wealth, and opportunity is rising

2

; traditional and secure employment pathways in the

“rust belt”states have disappeared; while “deaths of despair”are rising, especially

among the poorly educated. Francis Fukuyama (2018) does not necessarily dispute

these conclusions, but focuses centrally on the issue of “identity,”as a traditional

social-demographic order is challenged by waves of newcomers who in the labor mar-

ket are often at either end of the skill spectrum. That is, these newcomers are seen as

disproportionately occupying both the highly remunerated occupations in major capi-

tal city and financial centers alongside the disappearing unskilled occupations that

lesser-educated members of the community traditionally occupied. Other writers

emphasize the rising importance of social media as a vehicle for the dissemination of

“hate speech”and intolerance.

This issue is devoted to “Economic Reform in Southeast Asia.”The focus is politi-

cal economy aspects of economic reform. Among some advanced economies and

emerging market economies, we have seen the emergence of strong leaders who are

more authoritarian than traditional democratically selected leaders. They have adopted

populist policies to garner more votes in elections. Populist policies tend to be anti-

globalization or protectionist. A central question is whether these authoritarian leader-

ship with populist movement have some influence in Southeast Asia.

The overview paper by Basri and Hill (2020a) argues that “most of the factors

behind the discontent with globalization in the rich economies are not present to the

same degree in these countries, and that there has therefore been no major retreat

from the economic policy settings that have underpinned their past economic success.”

We largely find, therefore, that there is certain disconnects between anti-globalization

in some of the advanced countries, most notably in the USA, and the Asian emerging

market economies.

Populism often lacks a rigorous scientificdefinition. Basri and Hill (2020a) define a

“populist economic policy”as “one that emphasizes growth and income distribution

[without regard for] the risks of inflation and deficit finance, external constraints, and

the reaction of economic agents to aggressive nonmarket policies,”citing Dornbusch

and Edwards, quoted by Lee (2019). In political science, Guiso et al. (2020) defined

populism with three conditions: (i) anti-elitism; (ii) short-term protection; and (iii) a

disregard of long-term consequences. The first condition means that populists claim to

be on the side of the people in the conflict framework of the people versus the elite.

The second condition implies that populists pander to the fears of people against some

kinds of threat, for example, immigrants, imports, or redistributive policies. The third

condition means that populists discount heavily the long-term costs of policies and

actions. For (i) and (iii), economists can imagine many policies with short-term gains

Editor’s comment Hal Hill et al.

166 © 2020 Japan Center for Economic Research