ECONOMIC DIVERSIFICATION AND PRIMARY COMMODITY PROCESSING IN THE SECOND-TIER SOUTH-EAST ASIAN NEWLY INDUSTRIALIZING COUNTRIES

Abstract

Instead of simply relying on static comparative advantage considerations, the governments of the three second-tier South-East Asian newly industrializing countries of Indonesia, Malaysia and Thailand have all intervened to diversify their economies. Such diversification has included the promotion of new crops (e.g. oil palm) and natural resource exploitation, i.e. diversification of primary production, as well as the promotion of manufacturing. Besides import-substituting and export-oriented manufacturing, primary commodity processing and resource-based manufacturing more broadly have been very important for the industrialization of these countries. Malaysia´s palm-oil refining, Thailand´s agro-processing and Indonesia´s plywood manufacturing have figured significantly in their development of internationally competitive industrial capabilities.