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The Developer’s Dilemma in Southeast Asia (Review)

Reviewed item: 

Andy Sumner. 2018.
Development and Distribution: Structural Change in South East Asia
Oxford: Oxford University Press
ISBN 9780198792369

The trade-off between structural change and inclusive growth
Andy Sumner’s Development and Distribution: Structural Change in South East Asia unpacks two central questions of development: how are developing countries to achieve the transition from a predominantly agrarian economy to higher productivity sectors of manufacturing and services; and how are they to achieve economic growth that is inclusive while going through this structural transformation, given that the transition typically has resulted in increased inequality. These questions constitute the ‘developer’s dilemma’ –  a trade-off between structural change and inclusive growth. Structural transformation is historically thought to push up inequality for which empirical support has been presented in the author’s prior research.[i]

The book investigates the developer’s dilemma in Malaysia, Indonesia, and Thailand, which have been chosen for two reasons. One, in the period following the second World War very few countries have been able to approximate the structural characteristics of economies in the developed world, and among those which have, Northeast Asia and Southeast Asia dominate. The second reason is that Northeast Asia is often written about but there is little scholarship on Southeast Asia. To achieve an understanding of the developer’s dilemma, Sumner provides a thorough overview of economic theories of development, focusing on William Arthur Lewis and Simon Smith Kuznets, but touching upon Prebisch, Kaldor, Rostow, Polanyi, Kalecki, Keynes, Nurske, Schumpeter, Smith, Myrdal, Baran, Sweezy, Frank, Wallerstein and several others, which is a great synthesis for students of development.

The author argues that structural transformation and inclusive growth have been conceptually defined in a reductionist way as a result of which the two concepts have been disconnected. The Lewis model and Kuznets curve take centre stage as suitable models where structural transformation and inclusive growth can be situated. Sumner then periodizes the development in Malaysia, Indonesia, and Thailand into three phases, the classic developmentalist phase (late 1960s – mid-1980s) followed by the two-tier developmentalism (mid 1980s – late 1990s) and the new developmentalism (following the 1997 Asian Financial Crisis). The following chapters have a similar structure and look at sectoral, factorial, and integrative dimensions of structural transformation. These give a holistic and multiscalar view of structural transformation. This is followed by analyses of inclusive growth using measures such as reduction of poverty, inequality of opportunity in education, and employment opportunities, drawing on ideas from the multidimensional poverty approach. Each phase of developmentalism ends with a discussion on the social structure of capital accumulation which looks at the relationship between the state and private investment, as well as the interaction between domestic capital accumulation and global capital accumulation in each phase.

Achieving inclusive growth in developing countries
This work sits alongside the recent journal issue in World Development edited by Luc Christiansen and Will Martin,[ii] where one of the key insights from empirical analyses of structural transformation is that the greatest reduction in poverty is possible by growth in agriculture rather than outside it, which is a rather counter-intuitive finding. Sumner also finds that Malaysia, Indonesia, and Thailand achieve structural transformation without a rise in inequality by state investment in agriculture, bridging the gap between rural and urban, skilled and unskilled wages and productivity gains by capital and labour. This is extremely relevant to other developing countries such as India, that are reducing expenditure in agriculture and rural employment guarantee schemes.[iii]

Insights from across disciplines
While Development and Distribution is written for development economists, the findings and arguments are relevant more broadly, and critiques of the ‘rise of Asia’ have appeared in area studies, geography, political science, and anthropology that are worth considering. What Development and Distribution does, particularly in the way it assesses social structure of capital accumulation is explain how Malaysia, Indonesia and Thailand are integrated with the global economy. This account averages out distributional tensions within each country arising out of regional differences owing to geographical and historical contingencies. It also leaves aside intra-society class, gender, and ethnic divides that contribute to capital accumulation for which readers may refer to the work of Erik Kuhonta.[iv]

The large body of longitudinal studies on villages in Southeast Asia[v] also show how the pathways to poverty and prosperity are locally determined and often contradictory to universalist notions of modernization. This approach focuses more on lives and livelihoods rather than broad structures and configurations of change. Tania Li in her book Land’s End: Capitalist Relations on an Indigenous Frontier (Duke University Press, 2014) finds how modernization within indigenous highlanders in Sulawesi, Indonesia convert common lands to grow cacao, which results in winners and losers, with the losers being rendered landless. The landless who should have been absorbed in other non-farm sectors are left behind in decades of Indonesia’s jobless growth. Jonathan Rigg has also written on how and why poverty persists amidst Asian prosperity,[vi] how peasants retain agricultural land despite the structural transformation[vii] because of precariousness in late capitalism, how an aging generation is involved in agriculture today, and how migration has resulted in the emergence of multi-local households.[viii] Rigg reiterates in his book Unplanned Development (Zed Books, 2012) that the nature of work outside agriculture in factories in Thailand have been insecure and state-benefits non-existent which prevents the farm transition to firmly take root. This insecurity inherent in factory work appears in Aihwa Ong’s work on spirit possession of Malay women workers in modern Malaysian factories[ix] who express their resistance to capitalist disciplining in violent acts of spirit possession. In the urban context, street vending has been heavily curtailed in Bangkok under its anti-vending policy,[x] in a context of a massive rise in street food vendors after the Asian Financial Crisis, further endangering precarious livelihoods in the urban informal economy. These accounts reflect the materiality of structural change for the people of various regions of Malaysia, Indonesia, and Thailand.

All in all, Development and Distribution asks and answers relevant questions using novel empirical and theoretical methods and is a must read for anybody interested in Asian studies and international development.

[i] Andy Sumner, Global Poverty: Deprivation, Distribution, and Development Since the Cold War, Oxford: Oxford University Press, 2016.
[ii] Luc Christiaensen and Will Martin, Agriculture, structural transformation and poverty reduction: Eight new insights, World Development, no. 109, 2018: 413–6.
[iii] Himanshu, Too little, too late: Apathy towards the rural sector, Economic & Political Weekly 53:9, 2018, https://www.epw.in/journal/2018/9/budget-2018%E2%80%9319/too-little-too-..., accessed 5 December 2019.
[iv] Erik Martinez Kuhonta, The Institutional Imperative: The Politics of Equitable Development in Southeast Asia, Stanford: Stanford University Press.
[v] Jonathan Rigg and Peter Vandergeest (eds), Revisiting Rural Places: Pathways to Poverty and Prosperity in Southeast Asia, Singapore: NUS Press, 2012.
[vi] Jonathan Rigg, Rethinking Asian poverty in a time of Asian prosperity, Asia Pacific Viewpoint 59(2), 2018: 159–72.
[vii] Jonathan Rigg, Albert Salamanca, and  Eric C. Thompson, The puzzle of East and Southeast Asia's persistent smallholder, Journal of Rural Studies, no. 43, 2016: 118–33.
[viii] Jonathan Rigg and Albert Salamanca, Connecting lives, living, and location: Mobility and spatial signatures in Northeast Thailand, 1982–2009, Critical Asian Studies 43(4), 2011: 551–75.
[ix] Aihwa Ong, Spirits of Resistance and Capitalist Discipline: Factory Women in Malaysia, New York: SUNY Press, 1987.
[x] Chidchanok Samantrakul and Sarah Orleans Reed, Bangkok’s renowned street vendors march against evictions – and rally widespread support, WIEGO, 7 September 2018, https://www.wiego.org/blog/bangkok%E2%80%99s-renowned-street-vendors-mar..., accessed 5 December 2019.

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