ABSTRACT
The late industrialization and economic catch-up of Northeast Asian states in the second half of the 20th century influenced economic policymaking in Southeast Asia, as several countries attempted to imitate the institutional structure of the industrial policy associated with developmental states. However, the institutional setup that facilitated the remarkable economic growth in Northeast Asia was not properly implemented in Southeast Asia (Doner, Ritchie, and Slater, 2005). Currently, Indonesian and Malaysian companies’ competitiveness can be described as sluggish, which results in a state of dependency on foreign direct investment, as well as foreign multinational corporations. Despite considerable economic growth, the political goal of generating a class of domestic industrial entrepreneurs has not been achieved. Instead, Southeast Asian firms are characterized by inefficiency and technological backwardness, which in turn contributes to their persistent lower positions in the global value chain (Tipton, 2009). The inability of Southeast Asian economies to develop a modern variety of capitalism with efficient corporations, entrepreneurial actors, and a rational state has inspired the notion of Southeast Asian “ersatz capitalism” (Yoshihara, 1988). This means that the Southeast Asian alternative to internationally competitive capitalists appears as an inferior duplicate, that is ersatz, of the Northeast Asian model.
