ABSTRACT
This chapter focuses on the process of industrialization in the five founding member countries, Indonesia, Malaysia, the Philippines, Singapore and Thailand. It discusses the rate and pattern of industrial growth and transformation and the export promotion efforts in the five countries. The chapter deals with the role of foreign direct investment and that of small- and medium-scale enterprises in Association of Southeast Asian Nations (ASEAN) manufacturing. It discusses the challenge facing the ASEAN countries in upgrading their industrial structures and technological capabilities. Unlike the other ASEAN countries, which have directed their promotion policies toward the small- and medium-scale industries proper, Indonesia has focused on micro and small enterprises, including cottage industries. There is a growing concern in the ASEAN countries that they cannot continue to rely on their traditional sources of comparative advantage–cheap labour and natural resources–to sustain their manufactured exports. The chapter summarizes the major points of the chapter and draws some policy implications.
