Learn more about the aims and approaches of Southeast Asian nations in pursuing economic development after independence.

JC History Tuition Online - How did the Dutch influence the Indonesian economy

How did the Dutch influence the Indonesian economy?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical Context
In the 19th century, the Dutch established the cultivation system known as the cultuurstelsel. The origin of the system can be traced to the early 1800s, in which the Dutch colonial government had struggled to engage private cultivators to raise crop production for export. Under the leadership of the Dutch Governor-General, van den Bosch, he switched to a different method to cultivate export crops.

In particular, the Dutch identified individual villages and instructed the people in each village to grow specific crops, such as rice, coffee and sugar. In the 1830s, export production from Java increased significantly due to the efforts put in by the Chinese merchants and indigenous Javanese ruling class and the Dutch officials.

The emergence of economic nationalism: Limitations of the Ethical Policy
Yet, the Dutch cultivation system was not deemed by all local natives as beneficial. Within the indigenous Indonesian community, some viewed economic participation by the Chinese merchants as a threats to their interests.

Influential merchant groups in urban Java, such as the Sarekat Dagang Islam, resented competition from the Chinese. The better-off farmers in Java, who controlled irrigated rice land, resented the enforced renting of land to the sugar companies. Most of those involved in the growing nationalist movement, including growing numbers of indigenous business people, would probably have agreed with the judgement of a later economist that ‘the developmental effort under the ethical system was too little and too late to be effective in raising levels of living of the Indonesian people’.

An excerpt from “Economic Change in Modern Indonesia: Colonial and Post-colonial Comparisons” by Anne Booth.

The Sarekat Dagang Islam (Islamic Trade Union) was initially formed as a Javanese traders’ cooperative to support textile traders against Chinese competitors. In 1912, it was renamed as Sarekat Islam as the organisation evolved into a mass political party.

The Dutch Ethnical Policy (Ethische Politiek) was identified as the root cause of the unequal economic opportunities that generated resentment towards the Chinese immigrants and the colonial power. The policy was guided by its slogan: ‘irrigation, education and emigration’.

The Dutch colonial administration aimed to enhance the irrigation facilities to increase agricultural productivity. However, the intended growth target was not realised. As a result, the poor living standards had fueled the growth of Indonesian nationalism instead.

The Ethical Policy sought to protect the ‘poor’ and ‘unenlightened’ Javanese peasant against the oppression by feudal Javanese overlords and ruthless Chinese. Its formulated lofty goal was to raise the prosperity of the indigenous population through direct state intervention in economic life.

[…] The economic downturn of the early 1920s and 1930s started a period of consolidation and eventually deterioration of the Ethical Policy. The political will to initiate ethical programs waned as the administration embarked on a policy of expenditure cuts to balance the budget.

An excerpt from “Dutch Commerce and Chinese Merchants in Java: Colonial Relationships in Trade and Finance, 1800-1942” by Alexander Claver.

What can we learn from this article?
Consider the following question:
– Assess the significance of economic challenges in influencing government intervention in post-independence Southeast Asian economies.

Join our JC History Tuition to learn more about colonial-era policies and their impacts on the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

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JC History Tuition Online - How was the Asian Financial Crisis resolved

How was the Asian Financial Crisis resolved?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis

Find out how ASEAN sought to contain the shocks created by the Asian Financial Crisis of 1997 [Video by ASEAN Plus 3 Macroeconomic research Office – AMRO]

An overview of the Crisis
In the early 1990s, many member nations of ASEAN pegged their exchange rates to the US dollar (USD). Given the dominant position of the Americans in the global economy, the peg instilled strong market confidence. Over time, the economic expansion in the region led to increased foreign capital inflows. By June 1997, cross-border flows in Southeast Asia totaled US$173 billion.

Greater access to capital had encouraged the provision of private loans. In turn, firms and household investors had ploughed funds into the real estate market. As a result, an asset bubble was formed. When the bubble burst, the Bank of Thailand declared its inability to prop up the largest finance company, Finance One, triggering fears of an impending market crash.

The anticipation of loan defaults resulted in the withdrawal of funds by short-term loan creditors. On the other hand, the gradual recovery of the Japanese economy resulted in the appreciation of the Yen and an interest rate hike. This led to shift of capital from Southeast Asia to Japan markets. The Bank of Thailand struggled to maintain the peg, such that nearly of its reserves were lost, forcing them to float the baht on 2 July 1997.

The unpegging of the Thai baht from the U.S. dollar in July 1997 and the baht’s subsequent collapse are commonly regarded as the triggers of the Asian crisis. The floating of the baht was made necessary by the exhaustion of Thai foreign exchange reserves, after months of futile efforts to stave off necessary policy adjustments and financial sector reforms. The crisis was preceded by an investment bubble, especially in real estate and stock markets, by widespread structural and prudential problems in the financial sector, and by a very rapid buildup of short-term foreign debt liabilities.

An excerpt from “The Asian Financial Crisis: Lessons for a Resilient Asia” by Wing Thye Woo, Jeffrey Sachs and Klaus Schwab.

Concerted efforts for crisis management
In view of the Asian Financial Crisis, governments in Southeast Asia sought solutions to dampen the adverse impacts. On 28 February 1998, finance ministers in ASEAN had gathered in Jakarta to set up a “mutual monitoring system. They agreed to seek technical support from the Asian Development Bank (ADB) to enhance the development of the system. Later, this system was known as the ASEAN Surveillance Process (ASP).

Ideally, the monitoring system will function as an early warning system, so that the affected member nations can intervene before the economic setback escalates into another crisis.

Before the Asian financial crisis, there were no surveillance mechanisms that functioned to detect irregularities in regional finance markets, either in ASEAN or in East Asia. In that respect, these two mechanisms were formed to address the same problem. However, while the ASEAN Surveillance Process oversees the ASEAN member states, the ASEAN+3 Surveillance Process addresses all East Asian countries.

An excerpt from “ASEAN as a Method: Re-centering Processes and Institutions in Contemporary Southeast Asian Regionalism” by Ceren Ergenç

ASEAN Plus Three: The Chiang Mai initiative
In 1999, the ASEAN Plus Three (APT) [or ASEAN+3] Summit was held, involving ASEAN members and three external powers – China, Japan and South Korea. In 6 May 2000, the APT met in Chiang Mai, Thailand, to derive a regional solution to avert another Asian Financial Crisis.

The Chiang Mai Initiative (CMI) became the first regional swap arrangement to address short-term liquidity difficulties in the Asia.

The CMI functioned on two branches:

  1. ASEAN Swap Arrangement (ASA) among the ASEAN member nations
  2. Bilateral Swap Arrangement (BSA) among ASEAN+3 countries

An important feature of the CMI was that crisis-affected members requesting short-term liquidity support could immediately obtain financial assistance up to an amount equivalent to 10 percent (later raised to 20 percent) of the maximum amount that could be borrowed, and that the remainder was to be provided to the requesting member under an IMF program. […] Essentially, the CMI was intended to be used for crisis lending and hence required conditionality.

An excerpt from “Monetary and Financial Cooperation in East Asia: The State of Affairs After the Global and European Crises” by Masahiro Kawai, Yung Chul Park and Charles Wyplosz.

In 2004, an expanded framework was proposed, known as the Chiang Mai Initiative Multilateralisation (CMIM). The CMIM would involve all ten members of ASEAN, China, Japan and South Korea, with a combined size of US$240 billion worth of foreign exchange reserves. Five years later, the CMIM was founded.

Structure of the Chiang Mai Initiative (CMI) [Source: Ministry of Finance, Japan]

What can we learn from this article?
Consider the following question:
– How far do you agree that the responses to manage the Asian Financial Crisis were adequate and effective?

Join our JC History Tuition to recap on the Asian Financial Crisis topic. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

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JC History Tuition Online - What is the Singapore Economic Development Board

What is the Singapore Economic Development Board?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical Context
In 1961, the Dutch economist Albert Winsemius made a trip to Singapore to assess the economic situation as a representative of the United Nations Development Programme (UNDP) team. Then, he proposed that the Singapore Government should embark on industrialisation to address the high levels of unemployment.

On 26 April 1961, the Minister of Finance Dr. Goh Keng Swee oversaw the tabling of the Economic Development Board (EDB) bill at the Legislative Assembly. The proposed EDB was meant to replace its predecessor – the Singapore Industrial Promotion Board (SIPB). The SIPB was formed in 1957 for industrial development, but it lacked the capacity to scale up domestic production.

Singapore’s rapid GDP growth to the mid-1960s was chiefly due to expansion in the manufacturing and construction sectors. The former depended principally on import-substituting industries encouraged by the formation of Malaysia; increased construction reflected economic planning which concentrated on investment in infrastructure. The Economic Development Board (EDB), as the government’s agent, was set up as ‘the spearhead for industrialisation by direct participation in industry’ and building necessary infrastructure.

An excerpt from “The Economic Growth of Singapore: Trade and Development in the Twentieth Century” by W. G. Huff.

Then, the Permanent Secretary Hon Sui Sen assumed the role of Chairman in the newly-established EDB. Notably, there were four divisions:

  • Finance Division
  • Projects Division
  • Industrial Facilities Division
  • Investment Promotion Division

1960s: Jurong Industrial Estate, JTC and DBS
The Industrial Facilities Division took the lead in shaping Jurong into an industrial estate. Factories were built to support the production of low-value-added goods such as wigs, toys and garments. The EDB had envisioned a production base to prepare Singapore for export-oriented industrialisation (EOI) in the future.

After the Separation from Malaysia in August 1965, plans for export promotion were accelerated. In 1968, the Jurong Town Corporation (JTC) was set up to oversee industrial estate development. In the same year, the Development Bank of Singapore (DBS) was formed to take over the EDB’s role of industrial financing.

Industrialization was government-driven and approximately 85 percent of the industrial land was developed by government bodies. As a key engine driving the industrialization program, the Economic Development Board (EDB) was set up in 1961 and was instrumental in the birth of the Jurong Industrial Estate. In 1968, the Jurong Town Corporation was created as a full-fledged statutory board of the EDB to undertake planning, development, leasing and management of all industrial estates.

An excerpt from “Spatial Planning for a Sustainable Singapore” by Tai-Chee Wong, Belinda Yuen and Charles Goldblum.

1970s: Gearing up for export-driven industrialisation
The EDB then intensified its efforts to raise the skills proficiency of the labour in Singapore. The Board facilitated the formation of joint government-industry training centres and provided access to training grants.

For instance, the Skill Development Fund was set up in October 1979 to finance manpower training, upgrade business operations and retrain displaced workers. Also, it promoted the expansion and diversification of local industries, so as to position Singapore as a business hub.

With strong government support, Singapore’s reliance on entrepôt trade had declined from 43 percent in 1960 to 16 percent by the early 1970s. In contrast, it was precipitated by the increase in manufacturing activities from 11 percent of total Gross Domestic Product (GDP) in 1960 to 20 percent in 1970. By then, unemployment rate hovered around 3 percent by the early 1970s.

The EDB’s export strategy was backed by wage control measures. In 1972, the National Wages Council (NWC) was formed to set national wage policies and create annual wage guidelines to regulate wage increment.

The modest wage increase in Singapore from the mid-1970s onwards was a boon to labor-intensive manufactured exports; it also held back the natural adjustment process of economic upgrading in terms of moving towards more capital-intensive activities. Furthermore a low-wage economy creates its own vicious cycle: low wages tend to encourage firms to use labor inefficiently which in turns results in low productivity and, hence, low wages. This actually happened in Singapore in the late 1970s, as labor productivity in 1979 dipped to an all-time low of 2.6 percent amidst full employment and a very tight market.

An excerpt from “Economic Development in East and Southeast Asia: Essays in Honor of Professor Shinichi Ichimura” by Seiji Naya and Akira Takayama.

In view of this economic setback, the Government embarked on its ‘Second Industrial Revolution‘ in 1979 to undergo economic restructuring. It can be understood by its three-pronged approach:

  • Wage increments to incentivise more efficient firms to raise productivity through automation
  • Fiscal incentives in the form of taxation and subsidies to promote expansion, automation and R&D spending
  • Manpower training to cultivate a pool of highly-skilled and literate labour force

Now, [the government] decided that a series of substantial wage increases was the best way to force less productive industries and companies to upgrade, close down, or relocate to countries with cheaper labour costs. These industrial restructuring efforts, driven by a clear government commitment to raise the wage of Singaporean workers , came to be known as Singapore’s ‘Second Industrial Revolution’ in contrast with the earlier industrialisation efforts that had been focussed on solving the unemployment problem.

An excerpt from “Singapore’s Productivity Challenge: A Historical Perspective” by Lee Kuan Yew School of Public Policy.

What can we learn from this article?
Consider the following question:
– To what extent was government intervention most crucial in explaining the economic development of Singapore?

Join our JC History Tuition to comprehend the topic on Paths of Economic Development in independent Southeast Asia. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

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JC History Tuition Online - How was Thailand affected by the Asian Financial Crisis

How was Thailand affected by the Asian Financial Crisis?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis

Examine the causes of the regional currency crisis to understand its significance on Southeast Asia [Video by Business Explained]

Overview
The Asian Financial Crisis of 1997 was a devastating problem that impacted fast-growing economies in Southeast Asia. Before the crisis, the region was fuelled by unprecedented growth, as seen by the rise of the ‘Tiger economies’ like Singapore.

The epicentre: Thailand
With the Bank of Thailand (BOT) at the helm of the nation’s push for financial liberalisation from the 1980s to the early 1990s, few had expected the central bank to assume partial responsibility for the underlying problems.

Since the 1960s, the Thai baht was tied to the American dollar. This arrangement proved beneficial in accelerating the Thai government’s switch from import-substitution industrialisation (ISI) to export promotion. The establishment of export processing zones (EPZs) was carried out in tandem with the large capital inflows from newly industrialised economies, such as Taiwan.

Like a moth to a flame: Enter the BIBF
Furthermore, the BOT had accepted Article 8 of the International Monetary Fund (IMF) Agreement on 20 May 1990. It meant that BOT agreed to open the Thai economy to a larger degree of financial liberalisation. Notably, the Bangkok International Banking Facilities (BIBF) was formed in March 1993 as an offshore banking centre, turning the nation in to an investment hub that could compete with Singapore.

As a result of Thailand’s market-friendly measures, the economy gained from a tremendous amount of capital inflow.

In fact, between 1988 and 1996 Thailand was the recipient of the largest capital inflows relative to GDP in the world. According to the Bank of Thailand, between 1988 and 1996 Thailand received a staggering cumulative amount of US$100.3 billion, about 55 per cent of 1996 GDP, or 9.4 per cent of GDP on average per annum.

An excerpt from “The Asian Financial Crisis: Crisis, reform and recovery” by Shalendra Sharma.

An impending disaster
However, excessive capital inflow proved to be more detrimental than beneficial for Thailand. In particular, the influx of short-term capital, also known as ‘hot money‘, have debilitating effects on the economy, such as a widening current account deficit and an appreciation of the real exchange rate.

Although capital control measures were introduced on 8 August 1995, such responses proved futile. By mid-1997, Thailand’s external debt stood at US$94 billion. Its current account deficit was nearly 8.5% of the Gross Domestic Product (GDP).

In anticipation of the Thai government’s inability to finance their ever-growing foreign debt, foreign investors brought their money out of the nation. On 10 May 1996, the Bangkok Bank of Commerce (BBC) collapsed, causing widespread panic in the financial market. In December 1996, more than 50 percent of the companies listed on the Stock Exchange of Thailand (SET) declared falling earnings. On 5 February 1997, Somprasong Land Company defaulted.

On 5 February came the first Thai default, by the company Somprasong, on a foreign loan repayment. Later that month, it was announced that the largest of the finance companies, Finance One, was seeking a merger with a bank to stave off collapse. In the face of widespread fears of an impending financial implosion, Financial Minister Amnuay and central bank governor Rerngchai Marakanond suspended trading of financial sector shares on the stock exchange and went on national television to announce a series of emergency measures designed to reassure nervous markets.

An excerpt from “The Asian Financial Crisis and the Architecture of Global Finance” by Gregory W. Noble and John Ravenhill.

Although the Thai Prime Minister Chavalit Yongchaiyudh had claimed that the baht would never be allowed to devalue, a massive depreciation occurred on 2 July 1997. Subsequently, the Chavalit administration turned to the IMF for help.

What can we learn from this article?
Consider the following question:
– How far do you agree that the Asian Financial Crisis was inevitable?

Join our JC History Tuition and learn to answer essay questions on the Asian Financial Crisis. The H2 and H1 History Tuition features enriching and skills-oriented online classes to consolidate what you have learnt at school and apply them to examination-based questions. Get concise study notes and receive tutor feedback to correct your writing errors productively.

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JC History Tuition Online - What is the SIJORI Growth Triangle - Economic Development Notes

What is the SIOJRI Growth Triangle?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Growth Triangle: What is it about?
In December 1989, the Deputy Prime Minister of Singapore, Goh Chok Tong, proposed the idea of a ‘Growth Triangle’. Countries could capitalise on the complementarity of resources and the geographical proximity to promote economic integration.

For Singapore, it had skilled labour and well-developed transportation and communications infrastructure. For Malaysia and Indonesia, Johor and Riau Islands had abundant natural resources like gas, water and land.

Thus far, the “Growth Triangle” has been implemented through a series of bilateral arrangements, rather than through one multilateral agreement, with development primarily led by the private sector. The three governments in turn coordinate investments, immigration, and other policies and plans to adjust to the requirements of the private sector.

An excerpt from “The Growth Triangle of Singapore, Malaysia and Indonesia” by Terence P. Stewart and Margaret L. H. Png.

The SIJORI
The Singapore-Johor-Riau (SIJORI) Growth Triangle was created as a tripartite arrangement between Singapore, Malaysia and Indonesia on 20 December 1989. Notably, the Singapore-Riau link had contributed to the development of industrial parks and tourist resorts in the Indonesian islands like Batam and Bintan.

SIJORI was formed in 1989 and covers a population of more than 8 million people. It is built on a vertical division of labour, whereby Singapore serves as the supplier of advanced electronic infrastructure, technology, financial and insurance services, a comfortable international entrance port, and international know-how. The Batam island (in Riau, Indonesia) supplies low-cost labour and land, whereas Johor (Malaysia) provides semi-skilled labour, industrial sites and competence.

An excerpt from “Rethinking Regionalism” by Fredrik Söderbaum.

What can we learn from this article?
Consider the following question:
– Assess the view that regional cooperation was vital in shaping the economic development of Singapore in the 1990s.

Join our JC History Tuition to learn more about Paths to Economic Development in independent Southeast Asia. The H2 and H1 History Tuition programmes feature online classes, study references, essay and SBCS outlines.

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JC History Tuition Online - What is the Winsemius report - Economic Development Notes

What is the Winsemius report?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Find out how the Dutch economist Albert Winsemius contributed to Singapore’s economic development [Video by The HEAD Foundation]

Who is Albert Winsemius?
Albert Winsemius began his career as a price controller in the Netherlands. After the end of the Second World War, Winsemius assumed the role as a director-general of industrial development in the Finance Ministry. After Singapore attained self-government in 1959, Winsemius made a visit to Singapore. He was involved in the United Nations Development Programme (UNDP) team to determine Singapore’s capacity for industrialisation.

The Report
Then Prime Minister Mr Lee Kuan Yew had welcomed the Dutch economist’s review of Singapore’s economic conditions. Alongside the finance and Deputy Prime Minister Dr Goh Keng Swee, Winsemius served as an economic advisor to the government from the early 1960s to mid-1980s. There were two key observations that were made in his report.

The first was that Singapore did not lack entrepreneurs but they were mainly in commerce and not in manufacturing. This suggested the need for the government to participate directly to operate certain basic industries if neither foreign nor local enterprises were prepared to do so.

… The second point recommended the establishment of a nonpolitical EDB with divisions for financing, industrial facilities, projects, technical consulting, services, and promotion. The report recognized that the EDB’s core function should be the promotion of investment and that it should eventually hand over its financing activities to an industrial development bank.

An excerpt from “Lessons from East Asia” by Danny M. Leipziger.

Notably, the Singapore government had accepted the report’s recommendations. On 1 August 1961, the Economic Development Board (EDB) was established as a statutory board to plan and implement strategies for Singapore. The EDB was helmed by Hon Sui Sen, overseeing the industrialisation policies, particularly the development of the Jurong Industrial Estate.

The Jurong Project
The Report concluded that the development of industrial infrastructure was of paramount importance to Singapore’s growth and expansion of its manufacturing sector. Jurong was identified as a viable location for industrialisation, given its flat terrain and proximity to commercial port installations.

Jurong was the only waterfront area in Singapore that “possessed all the necessary conditions for development as an integrated town with the economic base centered around an industrial estate of considerable magnitude“. The Winsemius Report recommended establishing an integrated township that would consist of about 16,000 acres, significantly larger than the 9,000 acres a team of Japanese experts had proposed earlier.

An excerpt from “Infrastructure Strategies in East Asia: The Untold Story” by Ashoka Mody.

What can we learn from this article?
Consider the following question:
– How far do you agree that the Winsemius Report was the fundamental cause of Singapore’s successful industrialisation policies.

Join our JC History Tuition to learn more about Paths to Economic Development in independent Southeast Asia. The H2 and H1 History Tuition programmes feature online learning lessons that cover topical review, essay and source based case study skills development.

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JC H2 History Tuition Online - What is financial liberalisation - Economic Development - Essay Notes

What is financial liberalisation?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Learn more about the economic impacts of the Doi Moi in Vietnam in shaping economic development [Video by the IMF]

The Pursuit of Economic Growth
As governments in independent Southeast Asian states raced to advance their economies through various approaches, financial liberalisation became of the pivotal efforts in fulfilling their targets. This trend was largely observed by the late 1980s across the nations in Southeast Asia.

Vietnam: Doi Moi
In 1986, Vietnam introduced free-market economic reforms known as Doi Moi (“economic renovation”) to revive its economy and spur growth. Led by the General secretary Nguyen Van Linh, the Vietnamese government passed the Foreign Investment Law (1987) that allowed foreign ownership for firms investing in areas like consumer goods. Two years later, the government floated the exchange rate, which supported further liberalisation of markets.

Thailand: Currency devaluation
In early 1980s, the Prem government sought to attract foreign investments to support its export-oriented industrialisation (EOI) policies and correct a trade deficit. In November 1984, the Thai baht was devaluated by 15%. This proved beneficial as foreign investments from Japan surged to $27.9 billion in 1990. In addition, the Bangkok International Banking Facility (BIBF) was set up in 1993, which provided tax incentives to its banks.

Singapore: Export Promotion
In comparison with its regional counterparts, Singapore embarked on financial liberalisation at a relatively earlier stage due to its inherent constraints, such as limited land size. As such, the government adopted EOI in the late 1960s, as observed by the Export Expansion Incentives Act (1967) that reduced the tax rate for selected industries to 4% for 15 years.

On 1 January 1971, the Monetary Authority of Singapore (MAS) was established. The MAS was granted the authority to regulate the financial services sector in Singapore. The MAS maintained a strong and stable exchange rate to attract foreign investments.

A Brewing Storm: The Washington Consensus
Against the backdrop of Crisis Decades that plagued many developed and developing economies in the 1970s and 1980s, particularly the Third World Debt Crisis, British economist John Williamson introduced the “Washington Consensus” term in 1989.

At that time, USA proposed that both the World Bank and the International Monetary Fund (IMF) should support debt management through a series of liberal reforms. These structural reforms included financial liberalisation, flexible exchange rates and free trade. In return, these developing countries would receive loans.

However, the increased emphasis on liberalisation proved disastrous to Southeast Asian economies. Without adequate regulatory frameworks, the adverse effects of currency speculation then triggered the Asian Financial Crisis in 1997.

What can we learn from this article?
Consider the following question:
– Assess the significance of financial liberalisation in shaping the economic growth of Southeast Asian states after independence [to be discussed in class].

Join our JC History Tuition and find out how you can apply your knowledge of Paths to Economic Development as well as other topics in the A Level History syllabus to essay and source based case study questions effectively. Our programmes are conducted online to support students taking either H1 or H2 History. Get feedback on how your answers can be further improved by consulting our JC History Tutor.

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JC H2 History Tuition Online - What is industrialisation - Economic Development - Essay Notes

What is industrialisation?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Jurong Town Hall was developed in 1968 to oversee the development of industrial estates in Singapore. It served as the headquarters for the Jurong Town Corporation (JTC) [Video by Urban Redevelopment Authority]

Historical Context: Why governments pursued industrialisation?
After the end of World War II, many Southeast Asian economies were severely damaged. These countries lost their physical infrastructure and were in dire need of immediate post-war recovery. In Philippines, nearly fourth-fifths of its infrastructure in Manila was wiped out by the war.

Additionally, the adverse consequences of the Japanese Occupation could be observed in the conversion of industries to support the war efforts of these adversaries. In Burma, the Japanese restructured its economy and caused severe famine. After the war, rice exports fell to 500,000 tons in 1950.

In view of these significant challenges, the governments in Southeast Asian states embarked on industrialisation.

1. Modernisation of the agricultural sector
For countries that had agrarian economies, industrialisation was carried out to raise production. Governments established state agencies and provided substantial funding to support producers in the agricultural sector.

In Malaysia, the Federal Land Development Authority (FELDA) [Lembaga Kemajuan Tanah Persekutuan] was established on 1 July 1956 under the Land Development Act. Its purpose was to support resettlement for the local families that had land with substantial oil palm or rubber.

In addition, FELDA received loans from the World Bank to finance infrastructural development. In particular, the Malaysian government supported the construction of roads, farms and water supply access.

2. Import-substitution industrialisation (ISI)
At the initial stages of economic development, many governments implemented ISI to nurture domestic firms. Their intent was to kick-start industrial production to grow the local economy rapidly.

In Singapore, the government reviewed the Winsemius Report that highlighted the importance of state-guided industrialisation. In 1959, the Pioneer Industries Ordinance was passed to grant exemptions from company tax for five years.

Furthermore, the Economic Development Board (EDB) was formed on 1 August 1961. Under the guidance of then Minister for Finance Dr Goh Keng Swee, the EDB would “plan, coordinate and direct” the industrialisation process.

3. Export-oriented industrialisation (EOI)
Yet, the emphasis on ISI was inadequate to sustain economic development in Southeast Asian states. Therefore, governments shifted their focus towards EOI.

As the global economy became more inter-connected due to the liberalisation of world trade, countries in Southeast Asia began to promote international trade.

In Indonesia, Suharto’s government signed the General Agreement on Tariffs and Trade (GATT), thus admitting the country as a member of GATT in March 1985. Also, the government reduced its tax rate and eased trade regulations.

Coupled with the process of financial liberalisation, the Indonesian government was successful in enabling the large inflows of foreign investment by the early 1990s.

What can we learn from this article?
Consider the following question:
– How far do you agree with the view that industrialisation was most important in shaping the economic development of independent Southeast Asian states [to be discussed in class]?

Join our JC History Tuition and find out how you can organise your content materials. We provide summary notes, essay outlines and source-based case study practices. Our exam-driven classes feature the refinement of reading and writing skills through the review of past examination questions. These programmes are offered to JC1 and JC2 students taking either H1 or H2 History.

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JC History Tuition Online - What is the Green Revolution - Economic Development - JC History Essay Notes

What is the Green Revolution?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Learn more about the the Norman Borlaug, “Father of the Green Revolution”.

Origins of the Green Revolution: Enter Norman Borlaug
Many countries such as Mexico and India were facing hunger and poverty. Together with a growing population, rice producers could not keep up with the burgeoning demand for food.

After Norman Ernest Borlaug completed his studies at the University of Minnesota, he embarked on his research journey in Mexico. He held the belief that sustainable agriculture could be achieved. In time, Borlaug’s efforts had paid off. It led to the creation of disease-resistant wheat strains that paved the way for the Green Revolution.

In 1964, Borlaug joined the Centro Internacional de Mejoramiento de Maíz y Trigo (CIMMYT) that specialised in the improvement of maize and wheat as well as the Consultative Group for International Agricultural Research (CGIAR). The CGIAR later became the central network for international organisations that engaged in research on food security.

Over the years, Borlaug’s contributions led to the improvement of new crops like barley, sorghum and triticale.

International Rice Research Institute (IRRI)
In 1960, the Philippine Government oversaw the creation of the IRRI. The institute set up its headquarters in Los Baños, Laguna (near Manila). With funding support from the Ford and Rockefeller Foundations, the IRRI aims to reduce poverty and hunger via rice research.

In 1978, the government capitalised on the Green Revolution by launching the Masagana 99 (Rice production programme) to improve credit access to rice farmers and achieve rice self-sufficiency. As a result, the local farmers benefited from the cultivation of high-yielding varieties (HYVs).

Impacts on Southeast Asian economies
The Green Revolution was a boon to many economies in the region. In Thailand, the government increased its investments in fertilisers and high-yielding strains of rice. From the late 1960s to early 1970s, rice production doubled.

In Indonesia, Suharto introduced the BIMAS (agricultural guidance programme) to facilitate the distribution of high-yielding rice varieities. By 1985, poverty was significantly reduced and the country attained self-sufficiency in rice.

“BIMAS is a system of agricultural extension, planned and on a mass scale, that aims to raise agricultural production, and at the same time to increase the propserity of farmers and of society…”

Soedarsono Hadisapoetro, Agriculture Minister (1978-1973)

Conclusion: Was the Green Revolution important?
In view of these developments, it is imperative to consider the significance of the Green Revolution in driving the growth of the economies in independent Southeast Asian states. Its importance has to be understood by analysing the state-guided approaches as well as the outcomes.

What can we learn from this article?
Consider the following question:
– How far do you agree that the economic development of independent Southeast Asian states was largely the result of external factors [to be discussed in class]?

Sign up for our JC History Tuition and find out how you can organise your content for the topic on Paths to Economic Development. Given the wide spectrum of issues to consider, we have derived a condensed set of notes to support your revision.

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JC History Tuition Bishan Singapore - What were the consequences of the Asian Financial Crisis in 1997 - JC History Essay Notes

What were the consequences of the Asian Financial Crisis?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis

The aftermath of the regional currency crisis
In view of the causes that explain how the Asian Financial Crisis began, it is important to examine its consequences. This includes the government responses that varied between Southeast Asian nations, such as the bail-out loans by the International Monetary Fund (IMF), crisis response packages and stringent financial regulatory measures.

Immediate government responses
After the Asian Financial Crisis happened, governments played a critical role in introducing immediate responses to arrest the situation.

For instance, the Thai government tried to maintain the peg by tapping on its reserves to prevent further currency depreciation, which was caused by speculative attacks. From 1997 to 1998, it was estimated that nearly US$30 billion was spent to maintain the baht.

Unfortunately, their efforts proved futile, such that the abandonment of the fixed exchange rate led to rapid currency depreciation. On 2 July 1997, the baht was allowed to float, resulting in the depreciation of the currency value by 18%. By January 1998, the value had fallen to US$1 to $55 baht.

Given the economic interconnectedness of Southeast Asian markets, the Thai economic crisis spread to other neighbouring economies, which was known as the contagion effect.

Crisis Response Measures
Another important consideration was the introduction of crisis response measures to contain the economic crisis. These measures involved large government spending to stimulate the markets and facilitate recovery.

For example, the Malaysian government formed the National Economic Action Council (NEAC) in 1998 to pursue economic stabilization. One method included the imposition of capital controls to stabilize the ringgit.

Additionally, the national asset management company, known as Pengurusan Danaharta Nasional Berhad, was in responsible for relieving the banking system of its non-performing loans (NPLs) and assets. By 30 September 2005, the Danaharta had resolved all of its NPLs. It was reported to have met its recovery target of RM30.35 billion.

In fact, Danaharta was one of the three-pronged strategy that the Malaysian government introduced to achieve stabilization of the banking system. It also included Danamodal Nasional Berhad and the Corporate Debt Restructuring Committee (CDRC).

Acceptance of IMF Bail-out Loans
Lastly, the IMF also offered to provide bail-out loans to affected Southeast Asian economies. These conditional loans required governments to accept an IMF-imposed set of policies. In particular, the IMF required recipient countries to engage in fiscal austerity (spending cuts) to correct their balance of payment deficits. Yet, these governments were not running budget deficits, thus worsening the economic slowdown.

“I thought this was a mistake. For one thing, unlike the Latin American nations, the East Asian countries were already running budget surpluses. In Thailand, the government was running such large surpluses that it was actually starving the economy of much ­needed investments in education and infrastructure, both essential to economic growth. And the East Asian nations already had tight monetary policies, as well: inflation was low and falling. (In South Korea, for example, inflation stood at a very respectable four percent.) The problem was not imprudent government, as in Latin America; the problem was an imprudent private sector­­ – all those bankers and borrowers, for instance, who’d gambled on the real estate bubble.”

Former World Bank Chief Economist, Joseph Stiglitz, New Republic, 17 April 2000 – Source: https://bit.ly/2GIk2cp

For example, Indonesia accepted the IMF bail-out reluctantly. By the time the third agreement was introduced, the government acceded to IMF’s demands to remove subsidies on essentials, like food, medicine and fertiliser.

This proved to be disastrous, given that the loss of state support raised the cost of living and worsened socio-economic conditions. As a result, the skyrocketing basic commodity prices resulted in a surge in inflation rate. Poverty rate increased from 11% before the crisis to nearly 60% afterwards.

Furthermore, the economic instability had severe socio-political consequences that culminated in the resignation of Suharto.

What can we learn from this case study?
Consider the following question:
– How far do you agree that governments of Southeast Asian economies were responsible for the consequences of the Asian Financial Crisis? [to be discussed in class]

Now that you have learnt the consequences of the Asian Financial Crisis, it is imperative that you apply your knowledge to A Level History essay questions. You can sign up for our JC History Tuition to find out how you can organise your content and form well-analyzed essays to ace the GCE A Level History examination.

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