America chose to get involved in nation building efforts in South East Asia by encouraging economic development in order to foster social harmony and regional development. America encouraged the countries to dismantle state-led market systems and implement free market systems.
There was however uneven economic growth as some countries such as Thailand and Singapore having financial crisis while Japan, Taiwan and Korea flourished. Japan already had a basic institutional framework with a competent bureaucratic system. Taiwan and Korea had already moved to a level of industrialization from the 1950’s to participate in high exportation of their manufactured products.
Malaysia, Thailand and Indonesia become export-oriented in industry goods twenty years later. Furthermore they did not have regulatory or supervisory institutions in place to handle capitalism. A currency crisis that started in Thailand caused foreign investors to withdraw. The currency and equity markets crashed. Capitalism led to a crisis with select individuals who were politically connected benefiting and others suffering.
In time, the region recovered however certain countries are not developed as others. According to Stubbs, economic growth in Asia arose out of the experiences in the War in the region and not the American and IMF policies of free market systems. Stubbs examined the economic development of seven countries in Asia- Japan,Taiwan, South Korea, China, Singapore, Malaysia and Thailand.
He clearly states that the development in the region was not as a result of neoliberalism or the influence of the United States. Neoliberalism only works in countries where there are institutions in place that enforce competition. Without such institutions, neoliberalism failed in East Asia due to the creation of monopolies and oligopolies leading to uneven economic development.
There have arisen inequalities with economic growth only impacting certain areas or people in the country. Stubbs therefore emphasizes on the importance of having growth in the region together with equity for optimum results. It cannot be assumed that the adoption of neoliberalism in any region in the world will automatically lead to optimum results.
East Asia Economic Development : Stubbs states that the advantage of the World War 2 is that even though it destroyed infrastructure, it helped in destroying the old system of hierarchies and vested interests in the county that would have become an obstacle in development in the countries after the war. The wars gave opportunities for new institutions and reform in the region (Stubbs, pp 63).
The Korean War in Asia helped the entire Asian region in several ways. Japan becomes a supply and manufacturing area for the U.S military. The high commodity prices gave Singapore, Thailand and Malaysia a lot of wealth that enabled them to convince the people of the importance of the war against the communist guerillas.
The communist menace assisted the country to achieve two things. There was a strengthening of the state political power as the seven frontier states. There was need to strengthen their power in order to ward off internal and external attacks. Secondly, the region received high volume of U.S aid that helped build the physical infrastructure and the administrative and security systems.
The good relationship between South Korea and United States further assisted the country greatly. During the Vietnam War, South Korea was compensated by the United States in hard currency for providing over 50,000 troops. South Korea, Taiwan and other countries also gained a lot in the U.S procurement processes during the Vietnam War as they found a ready market for their manufacturing companies.
After the World War 2, Japan helped the East Asia region as it re-emerged as a key regional trader and investor. Even after the United States withdrew from the region in the 1970’s, the economic development was sustainable in the next four decades. America advocated for neoliberalism which is a market system that advocates for relatively free markets, liberalized trade and privatization.
The private industry is given power to determine the economic and political activities of the country. After the cold war, the United States pressured the Asian countries to implement neoliberalism through the IMF that ended up causing financial crisis and uneven development in the region.
The East Asian region found that the markets for their exports were restricted when America diverted its foreign direct investment to China. However, the countries have been able to come together and form regional economic partnerships to deal with weaknesses in their economic systems.
Stubbs, R. (2005). Rethinking Asia’s Economic Miracle. Basingstoke: Palgrave Macmillan.