Institutions and regional development in Southeast Asia

Abstract

The study of relationships between regional performance and varieties of capitalism within developing countries is an interesting and challenging topic. Although it is evident that capitalist institutions have made further inroads in Southeast Asia, it is far from certain how particular institutional arrangements should be classified and how institutions will change in the future. What seems reasonably certain, however, is that the traditional dichotomy of liberal capitalist systems (notably the USA and the UK) and coordinated capitalist systems (Germany and Japan) may prove to be an unsuitable lens through which to scrutinise the performance of non-core regions. For example, Vietnam, with a similar population to Germany, is neither liberal nor coordinated. This thesis has been concerned with the bandwidth of capitalist variety within Southeast Asia and has made an effort to apply elements of the Varieties of Capitalism approach as developed by Hall and Soskice (2001) to Thailand and Malaysia. The institutional turn in economic geography has proven to be valid and useful for explaining patterns of regional development in the developed world. Nevertheless, remarkably few publications employed an institutional approach for non-core regions in developing areas. From a theoretical and methodological point of view, then, it was and is interesting to scrutinize to what extent the institutional turn makes sense in such areas. The province of Satun in Southern Thailand and the state of Perlis in Northern Malaysia, two neighbouring non-core regions, were chosen to identify, explore and unravel capitalist institutions and to investigate its impact on patterns of economic activity and human development. Satun and Perlis were selected as research regions because they have much in common, but belong to two different countries. They have experienced remarkably different developmental trajectories: Satun’s economy has remained a resource frontier (seafood and natural rubber), whereas Perlis’ economy was transformed into an economy dominated by public services. Hence, national institutions matter and consequently, the Varieties of Capitalism approach is a suitable point of departure. Primary data were gathered by conducting two firm surveys, two social network surveys and semi-structured interviews with civil servants, bank managers, politicians and members of the regional press. In total, relevant information was obtained from 213 actors. The results indicate that the national institutional framework has a tremendous influence on the development performance in Perlis. The transformation into an economy based on (state owned) branch plants and public sector activities and the increasingly higher standard of living compared to Satun could not have been achieved without the support of the federal Malaysian government. Although several national institutions are present in Satun its development performance is also influenced by two other factors: regional institutions structured by ethnicity and (inter)national demand for seafood and natural rubber. Therefore, looking at differences between national institutional frameworks certainly makes sense, but researchers and policymakers should not neglect the interplay between national and regional institutions.