Proposal preview

Globalization, Inequality and Long-Term Development in Southeast Asia

Southeast Asia has been part and parcel of the global economy since at least the thirteenth century. Anthony Reid (1993) famously pronounced the fifteenth and sixteenth century as the ‘Age of Commerce’ in Southeast Asian history that spurred trends in economic growth and increased living standards. These trends, he argued, were discontinued as a result of the intrusion of the Dutch East India Company (VOC) in Southeast Asian trading patterns. More recent research has, however, shown that many of the earlier trends of growing trade were continued over the course of the seventeenth and eighteenth centuries, even though a part of the long-distance trade was brought under the monopoly of the VOC. This had consequences for the distribution of the benefits of this trade. Whereas earlier Malay and Chinese traders were the main beneficiaries, rents now accrued to the VOC. From the mid-nineteenth century, the region underwent further trade expansion and became integral part of the global economy of the time. It has often been noted that this trade expansion, while fuelling GDP growth, hardly benefitted the mass of the population. Colonial institutions may have influenced these patterns as virtually the entire region (with the exception of Siam) was brought under colonial control. After the de-globalization period of the interbellum, trade growth took off in progressively independent Southeast Asia, while many other peripheral economies stagnated or failed to industrialize. How did this effect trends in incomes and inequality? Did the population benefit more, now that it was freed from colonial institutions, or did pre-WWII trends persist?
Despite the importance of Southeast Asia for regional and global trade, the area has been greatly understudied. Thus, we attempt to bridge that gap by inviting papers focusing on Southeast Asia in the various ‘waves of globalization’. More specifically: how did these waves of globalization affect economic development and inequality in various parts of this diverse region? The proposed session already contains contributions on the different periods of globalization, starting with the effects of the Dutch East India Company trade (Robinson, Dell, Heldring), nineteenth- and early 20th-century globalization (Booth, De Zwart, Lopez Jerez, Van der Eng), as well as those more focused on the 20th century, including the postcolonial era (Bassino, Williamson). The session brings together large themes in global economic history, by relating the conference theme of ‘waves of globalization’ to patterns of colonialism, economic development, and inequality in Southeast Asia in the long-run.

Organizer(s)

  • Pim de Zwart Wageningen University pim.dezwart@wur.nl Netherlands
  • Montserrat Lopez Jerez Lund University montserrat.lopez_jerez@ace.lu.se Sweden

Session members

  • Jean-Pascal Bassino, Lyons Institute of East Asian Studies
  • Leander Heldring, Harvard University
  • James Robinson, University of Chicago
  • Melissa Dell, Harvard University
  • Anne Booth, SOAS, London
  • Pierre van der Eng, Australian National University
  • Jeffrey Williamson, University of Wisconsin-Madison
  • Montserrat Lopez Jerez , Lund University
  • Pim de Zwart, Wageningen University
  • Arayah Preechametta, Thammasat University
  • Minh-Tam T. Bui, Srinakharinwirot University
  • Thanyaporn Chankrajang, Chulalongkorn University
  • Jessica Vechbanyongratana, Chulalongkorn University
  • Kitae Sohn, Konkuk University

Discussant(s)

  • Jan Luiten van Zanden Utrecht University j.l.vanzanden@uu.nl

Papers

Panel abstract

Southeast Asia has been part and parcel of the global economy since at least the thirteenth century. From the mid-nineteenth century, the region underwent further trade expansion and became integral part of the global economy of the time. It has often been noted that this trade expansion, while fuelling GDP growth, hardly benefitted the mass of the population. Colonial institutions may have influenced these patterns as virtually the entire region (with the exception of Siam) was brought under colonial control. After the de-globalization period of the interbellum, trade growth took off in progressively independent Southeast Asia, while many other peripheral economies stagnated or failed to industrialize. How did these waves of globalization affect economic development, incomes, and inequality in various parts of this diverse region? Did the population benefit more, now that it was freed from colonial institutions, or did pre-WWII trends persist?

1st half

Globalization and Inequality in Southeast Asia during the late 17th to 18th Century: The Cases of Siam and An Nam

Arayah Preechametta, Minh Tam Bui

Contrary to other recent finding of the link between the 18th century global trade expansion and its economic gain which benefitted only to those elites in Southeast Asia, this paper offers a slightly different picture by pointing out that the rising of regional inequality generated by such expansions may also benefit the mass of local population given that globalization finally put an end to the corvee labor system in this area. The paper first points out that at the peak of Siam’s foreign trade with Western traders in the 17th century Ayutthaya, income inequality had actually increased due to trade expansion. Then the paper looks to the late 18th century Ratanakosin when the 400-year-old system of corvee labor had been slowly weakening by the expansion of global and domestic trades long before the signing of Bowring Treaty.

Contrary to other recent finding of the link between the 18th century global trade expansion and its economic gain which benefitted only to those elites in Southeast Asia, this paper offers a slightly different picture by pointing out that the rising of regional inequality generated by such expansions may also benefit the mass of local population given that globalization finally put an end to the corvee labor system in this area. The paper first points out that at the peak of Siam’s foreign trade with Western traders in the 17th century Ayutthaya, income inequality had actually increased due to trade expansion. Then the paper looks to the late 18th century Ratanakosin when the 400-year-old system of corvee labor had been slowly weakening by the expansion of global and domestic trades long before the signing of Bowring Treaty.

Canals and Orchards: The Impact of Transport Network Expansion on Agricultural Productivity in 19th Century Bangkok

Thanyaporn Chankrajang, Jessica Vechbanyongratana

This paper assesses the impact of Bangkok's nineteenth century canal network expansion on household cash crop cultivation decisions. Using a unique household-level dataset constructed from 1880s Bangkok orchard land deeds/tax records, we test whether the productivity of cash crop cultivation was higher when gaining access to Bangkok's expanded canal transportation network between 1826 and 1878. Under various measures that address potential endogeneity concerns, the results indicate that landowners with properties located adjacent to canals in sub-districts cross-cut by new canal infrastructure cultivated cash crops more intensively than landowners whose plots had no direct canal access. We conclude that productivity improvements caused by access to irrigation as a result of major transportation infrastructure projects for defence and international trade purposes enhanced cultivators' standard of living.

This paper assesses the impact of Bangkok's nineteenth century canal network expansion on household cash crop cultivation decisions. Using a unique household-level dataset constructed from 1880s Bangkok orchard land deeds/tax records, we test whether the productivity of cash crop cultivation was higher when gaining access to Bangkok's expanded canal transportation network between 1826 and 1878. Under various measures that address potential endogeneity concerns, the results indicate that landowners with properties located adjacent to canals in sub-districts cross-cut by new canal infrastructure cultivated cash crops more intensively than landowners whose plots had no direct canal access. We conclude that productivity improvements caused by access to irrigation as a result of major transportation infrastructure projects for defence and international trade purposes enhanced cultivators' standard of living.

Assessing changes in living standards in Southeast Asia in the 20th and early 21st century: What indicators should we look at?

Anne Booth

In the early years of the new millennium, the ten nations which comprised the Association of Southeast Asian Nations (ASEAN) differed widely in terms of per capita gross domestic product (GDP). There was also considerable variation between the ASEAN nations in widely used development indicators such as adult literacy and life expectancy. If the impact of economic growth and associated improvements in non-monetary indicators on living standards is to be fully understood, then we must look at changes in income, literacy or mortality rates by region, gender, ethnic group, and by social class. The purpose of this paper is to examine what indicators have been used in Southeast Asia to quantify the impact of economic growth on living standards, and to assess the problems associated with these indicators. The paper draws on earlier debates in economic history about the measurement of living standards, and also looks at the criticisms which...

In the early years of the new millennium, the ten nations which comprised the Association of Southeast Asian Nations (ASEAN) differed widely in terms of per capita gross domestic product (GDP). There was also considerable variation between the ASEAN nations in widely used development indicators such as adult literacy and life expectancy. If the impact of economic growth and associated improvements in non-monetary indicators on living standards is to be fully understood, then we must look at changes in income, literacy or mortality rates by region, gender, ethnic group, and by social class. The purpose of this paper is to examine what indicators have been used in Southeast Asia to quantify the impact of economic growth on living standards, and to assess the problems associated with these indicators. The paper draws on earlier debates in economic history about the measurement of living standards, and also looks at the criticisms which have been made of more recent attempts to measure global poverty and income distribution by the World Bank and other institutions.

Globalization, Institutions and Inequality in West Sumatra and West Java, c. 1800-1940

Pim de Zwart

Under what conditions does global trade lead to greater economic inequality? This question is investigated through a comparison of social and economic developments in two regions of colonial Indonesia: Western Sumatra and Western Java in the period between 1800 and 1940. These two regions were remarkably similar in terms of geography and factor endowments and the Dutch colonial government implemented a comparable system of forced coffee cultivation in both these areas in the nineteenth century. Yet, outcomes in terms of levels of well-being and degree of economic inequality in these areas differed as a result of different indigenous institutions regarding property rights. This paper highlights the persistence of indigenous institutions under colonial rule and their importance for social and economic development in an age of globalization.

Under what conditions does global trade lead to greater economic inequality? This question is investigated through a comparison of social and economic developments in two regions of colonial Indonesia: Western Sumatra and Western Java in the period between 1800 and 1940. These two regions were remarkably similar in terms of geography and factor endowments and the Dutch colonial government implemented a comparable system of forced coffee cultivation in both these areas in the nineteenth century. Yet, outcomes in terms of levels of well-being and degree of economic inequality in these areas differed as a result of different indigenous institutions regarding property rights. This paper highlights the persistence of indigenous institutions under colonial rule and their importance for social and economic development in an age of globalization.

2nd half

The Biological Standard of Living in Indonesia during the 20th Century: Evidence from the Age at Menarche

Pierre van der Eng, Kitae Sohn

This paper analyses long-term changes in the mean age at menarche (MAM) as a biological indicator of changes in the standard of living in Indonesia. It finds that MAM may have been 15.5 for birth cohorts in the late-19th century, decreasing to 14.5 by the 1930s, at which level it stagnated until the gradual decrease resumed after the early 1960s to around 12.5 in the mid-2000s. The GDP per capita elasticity of MAM was on average -0.07 for the 1870s to 1940s, higher than the -0.04 for the 1960s to 2000s, so that a 1% annual per capita GDP growth is associated with -0.07%, respectively -0.04% decrease in MAM. The paper considers that long-term improvements in nutrition, educational attainment and health care explain these trends. An international comparison of long-term MAM changes finds that MAM in Indonesia was much lower than in Korea and China until respectively 1970 and 1990,...

This paper analyses long-term changes in the mean age at menarche (MAM) as a biological indicator of changes in the standard of living in Indonesia. It finds that MAM may have been 15.5 for birth cohorts in the late-19th century, decreasing to 14.5 by the 1930s, at which level it stagnated until the gradual decrease resumed after the early 1960s to around 12.5 in the mid-2000s. The GDP per capita elasticity of MAM was on average -0.07 for the 1870s to 1940s, higher than the -0.04 for the 1960s to 2000s, so that a 1% annual per capita GDP growth is associated with -0.07%, respectively -0.04% decrease in MAM. The paper considers that long-term improvements in nutrition, educational attainment and health care explain these trends. An international comparison of long-term MAM changes finds that MAM in Indonesia was much lower than in Korea and China until respectively 1970 and 1990, but comparable to Japan until 1950 and to Malaysia until 1930. The paper presents reasons why these differences in national levels of MAM are unlikely to be related to dissimilarities across countries due to ethnicity and climate, and concludes that they are indicative of relative standards of living.

Philippine Inequality across the Twentieth Century

Jeffrey Williamson

In spite of persistent debates about income inequality and pro-poor policy in the Philippines, its history over the past century has been ignored by economists. This is surprising given that the Philippines already had its first Census in 1903, long before its neighbors, augmented by other relevant evidence embedded in official documents generated by the American insular government. It is also surprising given that we know that income distributions change only very slowly and must be examined over the long run to identify its drivers. This essay reviews the (thin) historical evidence and proposes explanations. There is no Kuznets Curve, and no Marxian, Pikettian or other grand endogenous inequality theory at work, but there are dramatic episodes of change driven by exogenous forces. The essay argues that if properly measured, we’d see an inequality rise in the late 20th century much like that of the OECD.

In spite of persistent debates about income inequality and pro-poor policy in the Philippines, its history over the past century has been ignored by economists. This is surprising given that the Philippines already had its first Census in 1903, long before its neighbors, augmented by other relevant evidence embedded in official documents generated by the American insular government. It is also surprising given that we know that income distributions change only very slowly and must be examined over the long run to identify its drivers. This essay reviews the (thin) historical evidence and proposes explanations. There is no Kuznets Curve, and no Marxian, Pikettian or other grand endogenous inequality theory at work, but there are dramatic episodes of change driven by exogenous forces. The essay argues that if properly measured, we’d see an inequality rise in the late 20th century much like that of the OECD.

Population growth and economic development in 19th centuries Philippines

Jean-Pascal Bassino

We know very little about living standards and population growth in 19th century Southeast Asia, with the notable exception of wages in Java (De Zwart & Van Zanden 2015). The implication is that the reliability of existing GDP estimates per capita, as well as alternative measures such as cash crop export per capita, or urbanization ratios, are affected by high margins of error for both the numerator and the denominator. Owing to the availability of parish records, the Philippines may be considered as having the most dependable demographic sources in the region (Doeppers & Xenos 1998). However, total population figures imply the implausible high compound growth rate of 1.7% per annum in 1800-1860 and 1.3% in 1860-1898. This study uses parish-level aggregate data for 1818 and 1876 for assessing changes in coverage and discusses the implications for our understanding of the economic transformation of the mid-19th century.

We know very little about living standards and population growth in 19th century Southeast Asia, with the notable exception of wages in Java (De Zwart & Van Zanden 2015). The implication is that the reliability of existing GDP estimates per capita, as well as alternative measures such as cash crop export per capita, or urbanization ratios, are affected by high margins of error for both the numerator and the denominator. Owing to the availability of parish records, the Philippines may be considered as having the most dependable demographic sources in the region (Doeppers & Xenos 1998). However, total population figures imply the implausible high compound growth rate of 1.7% per annum in 1800-1860 and 1.3% in 1860-1898. This study uses parish-level aggregate data for 1818 and 1876 for assessing changes in coverage and discusses the implications for our understanding of the economic transformation of the mid-19th century.

Frontier Development, Inequality, and Extraction in Peninsular Southeast Asia

Montserrat Lopez Jerez

The study of inequality in pre-modern economies has gained momentum, especially after better data has made available. With the exception of Saito (2015) for Japan, the study of patterns of economic inequality in Asia has been more scattered. In order to assist in assessing whether extraction was greater in areas of higher population densities in Asia, this paper is a first attempt to build social tables and extraction ratios for most of peninsular South East Asia, where areas of high population densities coexisted with the frontier expansion resulted from the great specialization and globalization wave of the turn of the 19th century and early 20th century. Our hypothesis is that in areas with higher population pressure to arable land (i.e. the Red River Delta), the extraction was higher than in the frontier regions of Siam, Cochinchina. Was extraction an outcome of the limitation in the capacity to generate a surplus...

The study of inequality in pre-modern economies has gained momentum, especially after better data has made available. With the exception of Saito (2015) for Japan, the study of patterns of economic inequality in Asia has been more scattered. In order to assist in assessing whether extraction was greater in areas of higher population densities in Asia, this paper is a first attempt to build social tables and extraction ratios for most of peninsular South East Asia, where areas of high population densities coexisted with the frontier expansion resulted from the great specialization and globalization wave of the turn of the 19th century and early 20th century. Our hypothesis is that in areas with higher population pressure to arable land (i.e. the Red River Delta), the extraction was higher than in the frontier regions of Siam, Cochinchina. Was extraction an outcome of the limitation in the capacity to generate a surplus by, for instance, reallocating labour or hindering the development of new economic opportunities? Or was it by affecting the distribution of incomes? And what are the long-term effects of such processes?