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Southwest Asia Economics
Quiz by Christine Kirkland
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Economic Activities in Southeast Asia.Southeast Asia, vast region of Asia situated east of the Indian subcontinent and south of China. It consists of two dissimilar portions: a continental projection (commonly called mainland Southeast Asia) and a string of archipelagoes to the south and east of the mainland (insular Southeast Asia). Extending some 700 miles (1,100 km) southward from the mainland into insular Southeast Asia is the Malay Peninsula; this peninsula structurally is part of the mainland, but it also shares many ecological and cultural affinities with the surrounding islands and thus functions as a bridge between the two regions. Mainland Southeast Asia is divided into the countries of Cambodia, Laos, Myanmar (Burma), Thailand, Vietnam, and the small city-state of Singapore at the southern tip of the Malay Peninsula; Cambodia, Laos, and Vietnam, which occupy the eastern portion of the mainland, often are collectively called the Indochinese Peninsula. Malaysia is both mainland and insular, with a western portion on the Malay Peninsula and an eastern part on the island of Borneo. Except for the small sultanate of Brunei (also on Borneo), the remainder of insular Southeast Asia consists of the archipelagic nations of Indonesia and the Philippines. Southeast Asia stretches some 4,000 miles at its greatest extent (roughly from northwest to southeast) and encompasses some 5,000,000 square miles (13,000,000 square km) of land and sea, of which about 1,736,000 square miles is land. Mount Hkakabo in northern Myanmar on the border with China, at 19,295 feet (5,881 meters), is the highest peak of mainland Southeast Asia. Although the modern nations of the region are sometimes thought of as being small, they are—with the exceptions of Singapore and Brunei—comparatively large. Indonesia, for example, is more than 3,000 miles from west to east (exceeding the west-east extent of the continental United States) and more than 1,000 miles from north to south; the area of Laos is only slightly smaller than that of the United Kingdom; and Myanmar is considerably larger than France. All of Southeast Asia falls within the tropical and subtropical climatic zones, and much of it receives considerable annual precipitation. It is subject to an extensive and regular monsoonal weather system (i.e., one in which the prevailing winds reverse direction every six months) that produces marked wet and dry periods in most of the region. Southeast Asia’s landscape is characterized by three intermingled physical elements: mountain ranges, plains and plateaus, and water in the form of both shallow seas and extensive drainage systems. Of these, the rivers probably have been of the greatest historical and cultural significance, for waterways have decisively shaped forms of settlement and agriculture, determined fundamental political and economic patterns, and helped define the nature of Southeast Asians’ worldview and distinctive cultural syncretism. It also has been of great importance that Southeast Asia, which is the most easily accessible tropical region in the world, lies strategically astride the sea passage between East Asia and the Middle Eastern–Mediterranean world. Within this broad outline, Southeast Asia is perhaps the most diverse region on Earth. The number of large and small ecological niches is more than matched by a staggering variety of economic, social, and cultural niches Southeast Asians have developed for themselves; hundreds of ethnic groups and languages have been identified. Under these circumstances, it often is difficult to keep in mind the region’s underlying unity, and it is understandable that Southeast Asia should so often be treated as a miscellaneous collection of cultures that simply do not quite fit anywhere else. Roofs of the Forbidden City, Beijing, China Britannica Quiz All About Asia Yet from ancient times Southeast Asia has been considered by its neighbors to be a region in its own right and not merely an extension of their own lands. The Chinese called it Nanyang and the Japanese Nan’yō, both names meaning “South Seas,” and South Asians used such terms as Suvarnabhūmi (Sanskrit: “Land of Gold”) to describe the area. Modern scholarship increasingly has yielded evidence of broad commonalities uniting the peoples of the region across time. Studies in historical linguistics, for example, have suggested that the vast majority of Southeast Asian languages—even many of those previously considered to have separate origins—either sprang from common roots or have been long and inseparably intertwined. Despite inevitable variation among societies, common views of gender, family structure, and social hierarchy and mobility may be discerned throughout mainland and insular Southeast Asia, and a broadly common commercial and cultural inheritance has continued to affect the entire region for several millennia. These and other commonalities have yet to produce a conscious or precise Southeast Asian identity, but they have given substance to the idea of Southeast Asia as a definable world region and have provided a framework for the comparative study of its components.Industry of Southeast Asia Industrialization in Southeast Asia is a relatively recent phenomenon, much of the development having occurred only since the early 1960s. As mentioned above, industrialization policies have been critical goals in the market economies of the ASEAN countries; and, in all of them except Brunei, industry’s share of the GDP has grown considerably. The most significant increases have occurred in Singapore, Thailand, and the Philippines. Manufacturing in particular has accounted for the greatest changes, with Indonesia, Malaysia, and Thailand making especially large gains during the 1980s. Small factories dominate, both in terms of the number of companies and the number of workers employed. Agricultural processing is most important in virtually all nations. The notable exception is Singapore, where the manufacture of a variety of products, headed by electrical and electronic and transport equipment, is dominant. In Thailand, Myanmar, and the Philippines, textiles and clothing are significant, as is the chemical industry in Thailand and Indonesia. Light, labour-intensive goods, such as electrical and electronic products, are increasingly important. It is in the manufacture of these products and textiles that the most employment has been gained. Tin is the most important metallic mineral in the region in terms of value, and Thailand, Malaysia, and Indonesia account for more than half of world production. In Malaysia and elsewhere, however, alluvial lodes are becoming depleted, and the remaining concentrations are less economical to mine. Fluctuating market prices have also discouraged tin production. Nickel, copper, and chromite are also mined, although the quantities produced in the region are minor in terms of world production. Southeast Asia has considerable reserves of oil and natural gas, notably in Indonesia, Malaysia, and Brunei. Trade Given Southeast Asia’s strategic location and the early development of trade there, it is not surprising that trade is especially important to all nations in the region. The value of regional trade is about one-third that of the United States. Most striking is the almost total dominance of trade by the market economies. Exports, as a percentage of the GDP, are small in Cambodia, Myanmar, Vietnam, and Laos and moderately so in Thailand, the Philippines, and Indonesia. Countries with a relatively large proportion of export trade are Singapore, Malaysia, and Brunei. Composition of exports is important. In this respect, Indonesia—the trade structure of which long has been dominated by oil—has been relatively successful in diversifying its exports toward plywood, rattan, coffee, rubber, and textiles. Conversely, Malaysia, with a trade pattern of exporting palm oil, tropical hardwoods, and tin, now derives the majority of its export income from petroleum products. This revenue has been used to build up the country’s industrial base. Thailand exhibits a much less diverse export structure, where food and manufactured goods account for nearly all of its total trade. Likewise, Brunei relies almost entirely on its petroleum exports. Singapore, however, has utilized its unique geographic position and highly educated labour force to attract multinational corporations. As a result, investment in the manufacturing and, increasingly, service sectors has greatly expanded. Intraregional trade among the ASEAN members, while important, accounts for only about one-fifth of Southeast Asia’s total trade. Philippine trade within the region is especially small, reflecting its long-term orientation toward the United States. Far more important, therefore, is the trade with countries outside the region, dominated by that with Japan, Europe, and the United States; increasingly significant, however, is the trade with Taiwan, China (especially Hong Kong), and South Korea.People of Southeast Asia By the late 20th century, Southeast Asia’s population (including Indonesia and the Philippines) was approaching a half billion, or about one-twelfth of the world’s total. This population, however, was unevenly distributed within the region. By far the nation with the largest population was Indonesia, with about two-fifths of the regional total; in contrast, Brunei’s population was only a tiny fraction of that. Nearly half of the regional population was accounted for by the mainland states, with Vietnam and Thailand being the most populous. Settlement patterns Southeast Asia is predominantly rural: three-fourths of the people live in nonurban areas. Moreover, population is heavily clustered in fertile river valleys and especially in delta areas, such as those of the Mekong and Irrawaddy rivers. Historical, cultural, and environmental influences also have affected the settlement patterns. Java and other core areas such as the Bangkok (Thailand), Hanoi, and Manila metropolitan areas contain high population densities. While the rate of urbanization in Southeast Asia is relatively low compared with those of other developing regions, it is increasing rapidly. Singapore is unique in that it is essentially totally urban. In addition, the Philippines has a much higher than average level of urbanization, in part because of its Spanish and American colonial history. The largest cities—Jakarta (Indonesia), Bangkok, and Manila—are among the world’s most populous. The growth of cities of all sizes is being fueled primarily by natural increase, but rural-urban migration also is a significant contributor. Rural dwellers continue to be attracted by the promise of employment and other opportunities, but for many migrants the informal (undocumented) economic sector in these large cities is the only hope for some form of employment. Settlement patterns in rural areas tend to be associated with agricultural practices. Shifting cultivation is still common in some parts of the region (notably the remote interior areas of Myanmar, Vietnam, and the island of Borneo), although the amount of land so utilized is gradually shrinking. The village is the unit of settlement and often functions collectively, and typically it is moved from time to time. By contrast, wet-rice cultivation, the dominant form of agriculture in Southeast Asia, is sedentary and results in relatively large rural agglomerations with well-developed village life and customs. Dry and upland farming often produces scattered homesteads. Population resettlement to provide agricultural employment and access to land is important in some Southeast Asian countries, notably Indonesia, Malaysia, and Vietnam. By far the largest program has been conducted in Indonesia, where more than four million people have been voluntarily resettled from Java and Bali to the less populated islands. Despite considerable success, the program has been plagued by such problems as improper site selection, environmental deterioration, migrant adjustment, land conflicts, and inadequate financing. A program in Malaysia also has been quite successful, in part because it has set much smaller resettlement targets and has been better funded. Vietnamese development policy also has utilized the resettlement of people in an effort to revitalize areas outside the major population centres.Economy of Southeast Asia Even prior to the penetration of European interests, Southeast Asia was a critical part of the world trading system. A wide range of commodities originated in the region, but especially important were such spices as pepper, ginger, cloves, and nutmeg. The spice trade initially was developed by Indian and Arab merchants, but it also brought Europeans to the region. First the Portuguese, then the Dutch, and finally the British and French became involved in this enterprise in various countries. The penetration of European commercial interests gradually evolved into annexation of territories, as traders lobbied for an extension of control to protect and expand their activities. As a result, the Dutch moved into Indonesia, the British into Malaya, and the French into Indochina. Europe’s interest and activity in the region was further enhanced by the opening of the Suez Canal, the development of telegraphic communications, the adoption of steam shipping, and the prospects for trade with China. In the case of Malaya, the gradual diffusion of British administration provided systems of law and order and of taxation and allowed for the gradual development of infrastructure, principally reliable transport systems. This environment attracted Chinese immigrants, and the growth of the tin mining industry soon followed. Later rubber plantations were established, which brought about still further immigration. Similar developments took place in Burma (Myanmar), Vietnam, and Indonesia. In Siam (Thailand) during the second half of the 19th century, a rapid expansion of Western enterprise occurred, though not by colonization. Both British and American firms began trading in the region. The impact of the Western activity was essentially to remove trade from what had been a Chinese monopoly and to emphasize the export of a single commodity, rice. Established indigenous textile and sugar-processing industries were replaced by imports, and the economy slowly became dependent on rice exports. The Philippines gradually developed a plantation farming system under Spanish and later American influence, although rice, sugar, and tobacco continued to be produced by small-scale growers and processed by Chinese enterprises until the mid-19th century. The incorporation of Southeast Asia into the world economy had a major impact on the distribution of the region’s economic development, and it created more uneven patterns of population growth and economic activity. It also brought about a stronger sense of class distinction and resulted in a larger discrepancy between the wealthy and poor. The worldwide economic depression of the 1930s severely affected the commercialized areas most dependent on the world economy. Unemployment rose, and the period produced the seeds of political change and activism that culminated in the independence of most of the region’s countries after World War II. Since the 1950s the economic development strategies of virtually all the capitalist Southeast Asian states have emphasized urban industrialization, while agricultural development generally has been viewed as subsidiary to industrial growth. These strategies have met with mixed success. Indeed, the trading pattern of the region by and large has continued to be one of producing and exporting raw materials and importing manufactured goods. Only Singapore has reached an advanced level of industrialization, in the process becoming one of the world’s great centers of industry and commerce. There is great disparity in development rates within the region, especially between the member and nonmember countries of the Association of Southeast Asian Nations (ASEAN). Those belonging to this grouping—Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand—generally have experienced significant economic development since the mid-1960s; the exception has been the Philippines, the economy of which has grown at a much slower rate. Development has been extremely slow or nonexistent in the non-ASEAN countries of Cambodia, Laos, Myanmar, and Vietnam, and these are among the poorest nations in the world.Linguistic composition Language patterns in Southeast Asia are highly complex and are rooted in four major language families: Sino-Tibetan, Tai, Austro-Asiatic, and Austronesian (Malayo-Polynesian). Languages derived from the Sino-Tibetan group are found largely in Myanmar, while forms of the Tai group are spoken in Thailand and Laos. Austro-Asiatic languages are spoken in Cambodia, Laos, and Vietnam. The languages of Malaysia, Indonesia, and the Philippines are rooted in an Austronesian and Polynesian stock. Despite this broad generalization, it must be noted that innumerable separate languages as well as dialects are used in the region. This linguistic diversity is especially conspicuous in fragmented areas such as the Philippines and Indonesia and in highland and remote areas on the mainland, and it has been a retarding factor in national integration and development. Notable in this regard is Myanmar. Dominant languages do exist in most of the nations. Burmese and Thai are spoken by large groups of people in Myanmar and Thailand, respectively. Similarly, Khmer is the primary language in Cambodia, as is Vietnamese in Vietnam. Within the Philippines, Pilipino (Filipino) and English are the official languages, but Tagalog and Visayan also are important. Malay and Indonesian are, respectively, the official languages of Malaysia and Indonesia; these languages are quite similar and are mutually intelligible. Indonesian is a good example of a true national language and is spoken widely across the archipelago. Thus, unlike in Myanmar, language actually has been a unifying element in the country. Numerous languages also have been introduced into the region by immigrant populations. Perhaps most significant are the variety of dialects spoken by the Chinese communities in many Southeast Asian countries. The most commonly used are Cantonese, Hokkien, Hakka, and Teochew, reflecting the southern Chinese coastal origins of many of the immigrants. The largest concentration of Chinese speakers is in Singapore, where they constitute the majority population. Concentrations of ethnic Chinese also live in most of the larger urban areas of the region. Indian immigrants also are numerous and are associated with the economic development of several Southeast Asian nations. Their role as labourers on the rubber plantations of Malaysia is well known, and Tamil and Hindi speakers form significant minorities in the country. Indian communities also are scattered throughout the region and are especially conspicuous in Singapore and Myanmar.ASEAN, international organization established by the governments of Indonesia, Malaysia, the Philippines, Singapore, and Thailand in 1967 to accelerate economic growth and promote peace and security in Southeast Asia. Brunei joined in 1984, followed by Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. East Timor has been granted observer status and is expected to become a full member in 2025. The ASEAN region has a population of more than 700 million, covers a total area of 1.7 million square miles (4.5 million square km), and had a combined gross domestic product of $3.62 trillion as of 2022. Since its establishment, ASEAN has substantially enhanced security and stability throughout Southeast Asia, while also promoting economic growth and cooperation on international issues. Yet certain regional issues remain divisive within ASEAN, such as Myanmar’s civil war, which has proved challenging for the bloc to address uniformly, and relations with China, particularly with regards to economic ties and territorial disputes in the South China Sea. ASEAN’s history ASEAN's 50th Summit ASEAN's 50th SummitDelegates from Southeast Asian nations gather at the 50th ASEAN Summit in Melbourne, March 2024. ASEAN’s origins can be traced back to earlier regional organizations such as the Southeast Asia Treaty Organization (SEATO), founded in 1954, and the Association of Southeast Asia (ASA), established in 1961. These early efforts, however, were limited in scope and membership. In 1967 ASEAN was established by Thailand, Indonesia, Malaysia, the Philippines, and Singapore with the signing of the ASEAN Declaration in Bangkok. The initial aim was to encourage regional cooperation and create a collective front against the spread of communism in Asia, reflecting the geopolitical concerns of the era. Lee Kuan Yew Lee Kuan YewPrime Minister Lee Kuan Yew of Singapore at the Third ASEAN Summit, 1987, in Manila. The organization gained a new level of cohesion in the mid-1970s following the Vietnam War. ASEAN’s first summit meeting, held in Bali, Indonesia, in 1976, resulted in several significant agreements, including the signing of the Treaty of Amity and Cooperation. The end of the Cold War and increased regional development and stability saw ASEAN expand its membership, incorporating Brunei, Vietnam, Laos, Myanmar, and Cambodia by the end of the 1990s. This period also marked a shift toward deeper economic integration, exemplified by the establishment of the ASEAN Free Trade Area (AFTA) in 1992 and the response to the 1997 Asian financial crisis with the Chiang Mai Agreement. The adoption of the ASEAN Charter in 2007 provided a legal and institutional framework defined by three core pillars: the ASEAN Economic Community, the ASEAN Political-Security Community, and the ASEAN Socio-Cultural Community. This structure has helped promote increased cooperation and mutual understanding, despite enormous differences in the political structures, cultural backgrounds, and development levels of member states.Religions Buddhism, Islam, and Christianity are all practiced within Southeast Asia. Buddhism, particularly the more orthodox Theravada form, dominates the religious pattern of most of the mainland; only in northern Vietnam is the more liberal Mahayana Buddhism more common. Islam is predominant in the southern half of the Malay Peninsula, the Malay Archipelago, and the southern Philippines. As a result of the large Muslim population in Indonesia, Islam is the religion of some two-fifths of Southeast Asians. The diffusion of the religion began in the early 14th century through contact with Muslim traders in northern Sumatra. Perhaps more than any of the other religions, Islam has been a strong force in binding together its adherents. It has profoundly affected cultural, social, political, and economic matters in areas where it is practiced. The spread of Christianity came with European contact. Roman Catholicism was introduced to insular Southeast Asia by the Spanish and the Portuguese in the 16th century and somewhat later to the Indochinese Peninsula by the French. Catholicism is most important in the Philippines and southern Vietnam. Protestantism also is locally important. The Batak and Minangkabau peoples in Sumatra and a growing number of Chinese in Singapore and elsewhere adhere to various Protestant denominations. Hinduism, once much more widespread, now is practiced by many people in the region’s Indian communities. In addition, this religion, modified by animism and other influences, is the primary faith on the island of Bali in Indonesia. Various forms of animism also are practiced in the region’s more remote areas, particularly in central Borneo, northern Laos, and northern Myanmar.