ECONOMIC GROWTH AND POLITICAL CHANGE IN ASIA Economic Growth and Political Change in Asia Graham Field First published in Great Britain 1995 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-24191-0 ISBN 978-1-349-24189-7 (eBook) DOI 10.1007/978-1-349-24189-7 First published in the United States of America 1995 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth A venue, New York, N.Y. 10010 ISBN 978-0-312-12696-4 Library of Congress Cataloging-in-Publication Data Field, Graham. Economic growth and political change in Asia I Graham Field. p. cm. Includes bibliographical references and index. ISBN 978-0-312-12696-4 (cloth) I. Asia-Economic conditions-1945- -Case studies. 2. Asia- -Economic policy-Case studies. 3. Asia-Politics and govel1uncnt-1945- --Case studies. I. Title. HC412.F44 1995 338.95--{\c20 95-12496 CIP ------------------------------------- © Graham Field 1995 Softeover reprint of the hardcover 3rd edition 1995 All rights reserved. No reproduction, copy or transmission of this publication may be made without written pemlission. No paragraph of this publication may be reproduced, copied or transmitted save with written pennission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. 10 9 8 7 654 3 04 03 02 01 00 99 98 To the memory of my father Contents Acknowledgements viii List of Abbreviations ix Introduction Factors in Economic Growth 13 2 Economic Policy 49 3 Dividing the Spoils 75 4 Veiled Authoritarianisms: Malaysia, Singapore and Indonesia 101 5 Market Stalinism: Burma, China, Laos, North Korea and Vietnam 127 6 Emerging Bourgeois Democracies: Hong Kong, South Korea, Taiwan, Thailand 153 7 Elite Democracies: Bangladesh, India, Pakistan, the Philippines and Sri Lanka 183 Postscript 213 Notes and References 219 Bibliography 241 Index 247 vii Acknowledgements This book owes a great deal to the close attention given to the manuscript by Patrick Heenan and Monique Lamontagne, whose insightful criticism and comments did much to shape its development. The author would also like to thank all those people who gave their time and thoughts in interviews as well as his Asiamoney colleagues who guided his first steps in the region. GRAHAM FIELD viii List of Abbreviations ABRI Angkatan Bersenjata Republik Indonesia ADB Asian Development Bank AFTA ASEAN Free Trade Area ASEAN Association of South East Asian Nations BJP Bharatiya Janata Party BN Barisan Nasional BSF Border Security Force BNP Bangladesh National Party BSPP Burma Socialist Programme Party CCP Chinese Communist Party CFD Campaign for Democracy CITIC China International Trust and Investment Corporation CPB Communist Party of Burma CPF Central Provident Fund CPP Communist Party of the Philippines DAP Democratic Action Party DPP Democratic Progressive Party EU European Union EPB Economic Planning Board EPZs Export processing zones FDI Foreign direct investment FUNCINPEC Front Uni National pour un Cambodge Independent, Neutre, Pacifique et Cooperati/ GATT General Agreement on Tariffs and Trade GDP Gross domestic product GLCs Government-linked corporations GNP Gross national product HCI Heavy and chemical industries HDB Housing Development Board HPAEs High performing Asian economies ICMI lkatan Cendekiawan Muslim Indonesia IMF International Monetary Fund ISA Internal Security Act JVP lanatha Vimukthi Peramuna KCIA Korean Central Intelligence Agency KMT Kuomintang KPNLF Khmer People's National Liberation Front LNG Liquefied natural gas ix x List of Abbreviations LPRP Lao People's Revolutionary Party LTTE Liberation Tigers of Tamil Eelam MCA Malaysian Chinese Association MIC Malaysian Indian Congress MNLF Moro National Liberation Front MQM Mohajir Qaumi Movement MRD Movement to Restore Democracy NBFIs Non bank financial institutions NEP New Economic Policy NIEs Newly Industrialising economies NPA National People's Army NPC National People's Congress NSP National Security Planning agency NTUC National Trade Union Congress NU Nahdlathul Ulama OECD Organisation for Economic Cooperation and Development PAP People's Action Party PAS Parti Islam PBS Parti Bersatu Sabah PDI Partai Demokrasi Indonesia PDP Palang Dharma Party PLA People's Liberation Army PPP Partai Persatuan Pembangunan PPP Pakistan People's Party PRC People's Republic of China R&D Research and development SAR Special Administrative Region SBSI Serikat Buruh Sejahtera Indonesia SEZs Special enterprise zones SLFP Sri Lanka Freedom Party SPSI Serikat Pekerjaan Seluruh Indonesia SLORC State Law and Order Restoration Council SMIs Small and medium sized industries SOC State of Cambodia TDRI Thailand Development Research Institute UMNO United Malays National Organisation UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNP United National Party UNTAC United Nations Transitional Authority for Cambodia USDA Union Solidarity and Development Association UUCA Universities and University Colleges Act WTO World Trade Organisation Introduction In a single generation, Asia's economies have undergone a transformation that has been more rapid and extensive than anyone could have imagined. From a collection of predominantly agricultural economies, linked to the world economy chiefly by colonial exploitation of natural resources and plantation agriculture, has emerged a group of vigorous exporting nations enjoying a commanding position in several industries. This has been a shift of global importance. As each fresh segment of the world has industrialised - North West Europe in the eighteenth and early nineteenth centuries; the United States, Germany and Japan in the latter half of the nineteenth cen tury; the Soviet Union in the 1920s and 1930s - it has had global implica tions for the distribution of income and power. The process unfolding today in Asia is of comparable dimensions, and the internal dynamics of that change are as complex and varied as were those in the earlier periods of industri alisation. Attempts to shoehorn these changes into an exclusive 'Asian' model or even 'family of models' I are misleading. The same analytical tools which gave us an understanding of European or North American industrialisation are as appropriate to economic and political change in Asia. Those changes are driven today by the same motor of capitalist accumulation, the search for the profits extracted from human labour applied to raw materials. Whether in the form of Hong Kong companies manufacturing fluffy toys in Southern China, the world's largest privately-owned power station being built in Pa kistan, state companies producing helicopters in Indonesia or the food processing industry turning out millions of tons of shrimps in Thailand, the same forces are at work as were apparent in iron smelting in Britain, rail way construction in the United States or, tellingly, the repeated incorpora tion of non-Western techniques and ideas in Western societies. Japan was part of this earlier phase of industrialisation and has now reached a higher level of economic development, having reconstructed its industrial base after the setbacks of the Second World War. For the Japanese people acclimatisation to industrialisation and its social consequences has extended over generations, while the long stretch of post-war prosperity has enabled the state to meet popular demands without having recourse to the brutal methods of the inter-war period. Japan's economic and political problems consequently have far more in common with those of other OECD members struggling to cope with restructuring advanced economies than they do with those of other Asian nations, which confront either the questions posed by the social and political consequences of rapid economic growth over the last