Guest Lecture from Hongkong University of Science and Technology
Rifqi Kartiko Fathianto~International Office FEB UI
On April 5th, Magister Perencanaan dan Kebijakan Publik (MPKP) FEB UI held a public lecture about “Inequality and Economic Development in Emerging Asia”. Prof. Donald Low from Hongkong University of Science and Technology (HKUST) was the lecturer for the session. The lecture was started with an opening remarks from Teguh Dartanto, Ph.D, as the Head of Department of Economics FEB UI.
Inequality in Southeast Asia is a fine example of the classic problem of developing countries. The inequality between countries indeed has been decreased as developing countries has benefit steady economic growth, but inequality within country has significantly increased. Most of Southeast Asia countries are stuck in the middle income trap. For example, Malaysia and Thailand has been trapped for almost 40 years. Indonesia itself has just entered the middle income group so we can’t say Indonesia is trapped. To tackle inequality, Prof. Low stated that broad economic development is the best solution.
He further explained that Asian developing countries, especially Southeast Asia, can learn from Northeast Asia countries such as Japan, South Korea, Taiwan, and recently China, to reduce inequality. There are 3 ideas that Prof. Low stressed as the key for North Asia successful development:
(1) Development model: land reform and countryside industrialization. Land reform policy was implemented to increase the agriculture sector productivity. The economic growth around farmers in the countryside and rural area led the farmers the ability to purchase industrial goods. Township and Village Enterprises (TVEs) in China is a fine example of the successful result of countryside industrialization. Land reform policy has led equal development, not only focusing on the urban areas.
(2) Export oriented industrial policy. Southeast Asia countries like Malaysia is aggressive in industrialization but they are only focusing on domestic market. Prof. Low explained that technology transfer isn’t happening much if we only focus in domestic market. The lack of export discipline was worsen by the little domestic competition, resulting slow economic growth. On the other hand, Northeast Asia countries was heavily industrialized and also aggressive in exporting their product to the global market.
(3) Financial repression and control, not financial liberalization. Financial liberalization should only be implemented if the country economy is firm enough and doesn’t rely in foreign currency. The premature implementation of financial liberalization policies prevents a country to be economically independent according to Prof. Low. He said that foreign direct investment (FDI) is fine, but short term debts is the problem because it has a huge potential to destabilizing the country’s economy.
At the end of the lecture, Prof. Low gave a brief information HKUST Master of Public Policy (HKUST MPP) to the students, stated that HKUST MPP has opened the registration phase. If you are interested or need more information, you can send e-mail to donaldlow@ust.hk or visit https://ppol.ust.hk/page.php?
