Southeast Asia: The Long Road Ahead (review)

Professor Lim explains that his book's third edition had to be written for two reasons: first, facts, figures and some important assessments and evaluations previously used had become outdated; and second, the previous editions had gone out of stock due to unanticipated demand requiring the publisher to resort to reprints to fulfill orders. It became time for a new edition and, in addition, he was able to undertake the task with the assistance of Sng Hui Ying and Sarah F. Chan, his colleagues at Nanyang Technological University (NTU).

Prior to focusing on reviewing the volume, it is instructive to remind previous readers and to acquaint new readers with the highlights of Professor Lim's distinguished career. He received his doctoral degree from the University of Oxford, taught economics at the former University of Malaya, was Reader and later Professor and Chair of the Economics and Statistics at the National University of Singapore and currently serves as Professor at NTU. For three decades he served as the Founder Chair of Singapore's National Wages Council and its Skills Development Fund Advisory Council and, as well, he founded the Federation of ASEAN Economic Associations. His publication list is extraordinary as is high list of professional consultancies.

Similar to previous editions, the third begins with an overall picture of the economies of Southeast Asia and a set of basic facts and key dates for each Southeast Asian country. The facts and figures lead into an introductory chapter on regional diversity measured in terms of different levels of development and growth rates, differences in per capita incomes, compositions of labour forces, structures of production patterns and degrees of trade orientation. The book contains additional chapters on agriculture and its importance to, and prospects for growth and development throughout the region. Lim also analyses industrialization effort, external trade and regional economic integration, fiscal and financial policies and the recent Asian financial crisis. The nexus among population issues, distribution and poverty and growth and development is covered along with a suggested development model for Southeast Asian countries.

Professor Lim is a strong advocate for trade liberalization and regional cooperation because he sees them as key elements underpinning growth generation. His treatment of openness and regionalism is clear and detailed. It is an example of his thoroughness and commitment to detail. Specifically, when covering the AFTA and CEPTS mechanism he goes into great detail to acquaint readers with the four categories of products, each subject to different trade barriers. Products on the Inclusion List undergo immediate liberalization because of reduced trade barriers in the form of tariff rate reductions. Products on the Temporary Exclusion List can be shielded from liberalization for a temporary period of time. The Sensitivity List "contains unprocessed agricultural products which are given a longer time frame before being integrated with the free trade area." (p. 219). Products on the General Exception List "are permanently excluded from the free trade area for reasons of national security, public morals ... and health" (p. 220).

Among other topical chapters are those on fiscal and monetary policy decisions including those that govern exchange rate convertibility. Professor Lim is concerned about threatening scenarios in which countries experience substantial and persistent current account annual deficits, maintain fixed exchange rates, offer full currency convertibility and rely upon short-term capital flows to finance current account deficits. The author suggests a very wise alternative to the above scenarios. He argues: "Although full exchange rate convertibility encourages optimal trade and optimal capital flows, it also gives full scope to currency speculation given the present global monetary and exchange rate environment. The general solution formula for developing countries, including those in Southeast Asia, appears thus: (a) Have full convertibility of the exchange rates on current accounts, (b) Have full convertibility on long-term capital accounts, (c) Have some discreet control over short-term speculative capital accounts, and (d) Have a free-floating or managed float exchange rate system against a basket of currencies." (p. 366)

While there is room for flexibility...