The Southeast Asian Economies in the Age of Discontent

AuthorHal Hill,M. Chatib Basri
Date01 July 2020
DOIhttp://doi.org/10.1111/aepr.12305
Published date01 July 2020
The Southeast Asian Economies in the Age
of Discontent
M. Chatib BASRI
1
and Hal HILL
2
1
University of Indonesia and
2
Australian National University
This paper investigates the effects on and responses of five middle-income Southeast Asian econ-
omies to the current global environment of authoritarian populism, the retreat from economic
liberalism, and the appeal of anti-globalization movements. While the political histories and
institutional capabilities of the five Indonesia, Malaysia, Philippines, Thailand and Vietnam
vary greatly, these economies have a history of at least moderately fast economic growth for
extended periods, and of increasing regional and global economic integration. We argue that
most of the factors behind the discontent with globalization in the rich economies are not pre-
sent 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. However,
there are no grounds for complacency. Economic growth is slowing in some of the countries,
economic insecurity remains widespread, and the development of durable independent institu-
tions has lagged economic growth.
Key words: economic policy, globalization, illiberalism, populism, Southeast Asia
JEL codes: F02, F60, H12, Z18
Introduction
1
The current era is arguably the most unsettling since the end of World War II. The
past decade has witnessed the rise of illiberalism, populism, anti-globalization move-
ments, economic nationalism, and democratically elected authoritarian leaders. These
so-called strong menare setting much of the global narratives: Donald Trump, Vla-
dimir Putin, Recep Tayyip Erdogan, Rodrigo Duterte, Jair Bolsonaro, Viktor Orban,
and others. Combined with slower economic growth, rising inequality, disaffection
with traditional politics, and rising illegal/unofficial migration flows in many countries,
the liberal, rules-based international order is being seriously undermined. The global
With the usual caveat we are indebted to Takatoshi Ito and Colin McKenzie for very detailed
comments on earlier drafts and much general assistance. We also thank our discussants, confer-
ence participants, and workshop participants at the University of the Philippines and the Univer-
sity of Canberra where this paper was also presented. Thanks also to Abrar Aulia for excellent
research assistance.
Correspondence: Hal Hill, Arndt Corden Department of Economics, Crawford School,
College of Asia and Pacific, Australian National University, Canberra, ACT 2601, Australia.
Email: hal.hill@anu.edu.au
© 2020 Japan Center for Economic Research 185
doi: 10.1111/aepr.12305 Asian Economic Policy Review (2020) 15, 185209
community appears unable to reach agreements on issues as diverse as climate change,
global trading arrangements, the movement of people, and the control of nuclear
armaments.
Although these leaders have generally derived their legitimacy at least in part from
electoral success, most of them appear intent on weakening the independent institutions
that underpin a modern democratic state. Indeed, according to Diamond (2019), a
democratic recessionis occurring: 62% of countries with a population greater than
one million people were democraticat the turn of the century. That figure has since
fallen to 51%. According to the 2019 Edelman Trust Barometer, based on its survey
of 26 countries and territories (mostly G-20 members), respondents in the majority of
cases selected distrustover neutralor trust.The annual Freedom House survey of
195 countries and 14 territories refers to a continuous decline in political rights and civil
liberties since 2005. The annual reporters without borders reached a similar conclusion.
In the present paper we ask how has Southeast Asia (henceforth referred to as the
Association of Southeast Asian Nations [ASEAN]
2
) responded? Are these global cur-
rents trade wars, threats to rules-based multilateralism, authoritarian populism, so-
called identity crises, and increasing disenchantment with elites”–finding resonance
in the region and, if so, do they portend a fundamental change in the regions develop-
ment strategies and trajectories? These are mostly open, moderately dynamic econo-
mies to which international issues and ideas are quickly transmitted. They are also
relatively small economies,
3
and their economic prosperity has derived in no small
measure from an open, rules-based international environment. This applies particularly
to the most open economies of the region, including three in our sample, Malaysia,
Thailand, and Vietnam.
For reasons of space we limit the topic in two respects. First, in view of ASEANs
great diversity in practically every respect size, population, living standards, political
history, institutional features, and much else we limit the study to five middle-
income countries: Indonesia, Malaysia, Philippines, Thailand, and Vietnam. These five
have a combined population of about 580 million people, 89% of the regions total.
4
They have all experienced extended periods of economic dynamism for some or all of
the recent decades and they are all at least moderately open economies. None has
experienced serious economic difficulties since the 19971998 Asian Financial Crisis
(AFC), although highly export-oriented Malaysia and Thailand were adversely affected
by the slowdown in global trade in 20082009.
Second, to the extent possible, we focus primarily on economic policies and out-
comes rather than the broader political and institutional issues that are the subject of
much international debate. For the record, Freedom House classifies Indonesia, Malay-
sia, and the Philippines as partly freeand Thailand and Vietnam as not free.In
recent years according to this survey, Malaysia has become more free, following its
2018 general elections, while Thailand has become less free, as a result of the military
coups of 2006 and 2014 and the heavily managed 2019 elections.
This paper is organized as follows. Section 2 provides the context, surveying some
of the recent global literature on the subject. Section 3, the main part of the paper,
Economic Policy in Southeast Asia M. Chatib Basri and Hal Hill
186 © 2020 Japan Center for Economic Research

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