ABSTRACT
Since the mid-1990s, especially during and after the currency–financial crises of 1997–98, there has been intense debate on the sources of economic growth in East and Southeast Asia. The debate has centred on the extent to which the key source of economic growth in this composite region was physical capital accumulation, relative to the contribution made by growth in total-factor-productivity. Most empirical studies suggest that, just like the former Soviet Union of the 1950s and 1960s, the East and Southeast Asian countries accumulated physical capital at a phenomenal rate, driving and sustaining rapid economic growth in the region for a full quarter-century, from the late 1960s until the mid-1990s. Although foreign capital was important for Malaysia, Singapore and Thailand and the like, Indonesia mobilized most of its investable resources domestically.
