INDUSTRIAL DEVELOPMENT OF THE SECOND TIER ASIAN NICS

Abstract

The spectacular success of East Asia's export-oriented industrialisation is one of the most important economic phenomenon of the last 30 years. A diverse group of countries, sharing little geographical proximity and a commitment to economic development, have recorded high rates of exports and economic growth. Until the early 1980s many ASEAN countries, particular Malaysia and Thailand still clung on to the import-substituting strategy, relying heavily on primary exports .By the beginning of the 1980s, the success of the ANIEs had begun to have a significant effect on policy makers in ASEAN. They had increasingly looked upon a liberal trading regime as well as the inflow of foreign direct investment as a quick way to jump-start the process of industrialisation. These second-generation NICs laid the foundation for their growth with stable macroeconomics policies and political stability which, together with low labour costs, appealed to foreign investors, increasingly from East Asia. Japanese foreign investment, followed by that of the ANIEs, provide the transfer of technology that the first generation NIEs had to secure by other means (World Bank 1993) While both countries rapid growth constitutes a strong empirical endorsement of outward looking polices, the region's very success has imposed new strains and challenges especially in the global trading environment. The objective of this dissertation is to analyse the role of export-oriented industrialisation in contributing to the structural changes of Malaysia and Thailand by examining the nature, scope, economic effects of export-oriented industrialisation