Consider the possibility that the reason these things didn't pan out was because we were "fed so much bullshit". I truthfully hope that in 30 years or so people will be saying the same thing about global warming.
The Population Bomb was written in 1966-67 and published in 1968, after tens of millions of people had died of famines in the '30s, '40s, '50s and '60s. The widespread adoption of improved agricultural techniques and use of hybrid varieties like dwarf wheat in India and hybrid rice in China ("The Green Revolution") did not take hold until the late 1960s through the 1980s, avoiding many of the catastrophic food shortages predicted in the book.
Don’t you think it’s because Western powers dictated the outcomes of these places? GB had their hands in everything, and certainly Kissinger is largely responsible for the delay in their development… what with the famines and all.
Interesting story as always. No doubt SASEA will benefit from China decoupling. However, from a US perspective, I wonder if Mexico/Central America will be a bigger factor. Note the biggest investment from China is Mexico. Right now, both Mexico and Costa Rica are growing rapidly in manufacturing.
agree... though I think it will end up exporting to itself and perhaps to Europe. we will see. I see Mexico/Latin America being a bigger impact to the US. Right now, in my world (electronics), packaging is the only thing which is really visible (largely because of Intel), and parts of that will move to central America. The chips act was actually extended to include Costa Rica for such purposes.
Good piece, thanks. Maybe a bit too hopeful, though?
Malaysia and Thailand have been important offshore manufacturing and assembly locations for tech for decades. Philippines and Indonesia have also been used by American companies for decades, though initially in lower tech fields (sewing sneakers, etc), but they are moving up the value chain. Bangladesh has been a fast mover. Of course these populous counties have long been important target markets for US consumer product companies (fast food, soft drinks, etc). Guess what I am saying is that none of this is new. American companies were active in these countries before the big China investment boom and it is natural for them to expand production there as a China hedge (though none of them offer the scale that China can- not even India). The state is too weak and corrupt (in a different way than China - think of Italy as a place to do business).
What is new is China investing in offshore assembly in these countries as part of a tariff/content-washing exercise(as you note in batteries). Mexico will also be a big beneficiary. Chinese investment and influence in these countries- especially in Indonesia, Malaysia, Thailand, Pakistan could be larger than American investment. Vietnam, India and the Philippines (for now) are likely to be circumspect about too much Chinese investment, but money talks. Investing in overseas factories and natural resources is a way for China to diversify its reserves away from financial assets and also secures supply chains and alliances (countries as unwilling to sanction or blockade China as India is unwilling to sanction Russia).
SASEA is not going to be an American/European sphere (SEATO didn’t end well) and the Chinese pay better bribes than even the Europeans. The bad loans of the Belt and Road and other initiatives left a bad taste but FDI (in factories and JVs) is likely to be better received (though locals don’t always like working for the Chinese any more than Arizonans like working for the Taiwanese).
1. Is South Asia and Southeast Asia a thing? I've been to Bangladesh many times and am struck by how disconnected its economy is, how high many tariffs are (eg. a 250% effective rate of protection on biscuits) and the extent to which, so far, it's just not part of wider regional value chains. It didn't even have any bilateral trade agreements until it signed one with Bhutan a couple of years ago. It's not part of RCEP although it might need to be in future. India-Bangladesh relations are also strained.
I also lived in SE Asia for several years and it clearly has very little to do with South Asia. The incomes of most people, internal dynamics, trade relations and technological sophistication just aren't the same. So yes, South Asia might be growing fast and getting more investment, and yes, SE Asia will continue to mop up investment from China and from nearshoring by US or European companies, but I'm less convinced that the two stories are connected or that there's any such emerging regional bloc. Rapid SE Asian growth is also obviously a long-standing phenomenon.
2. Surely faster Asian regional growth is regionalism, not globalisation? Some of those who sound the death-knell of globalisation say exactly that regions are on the rise, and that hyper-connected, globally footloose capital and labour will now become more regionally confined. As you say at the beginning, these people think that these blocs will compete with one another rather than cooperate internationally.
I think a common mistake people make is to think that in order for the countries of a region to be economically integrated with *the world*, they first have to be economically integrated with *each other*. This isn't so! East Asia is a good counterexample.
I'm sure they do make that mistake - have come across it myself several times. My point was more that these acronyms can be overdone; that there isn't always much coherence and it often doesn't make sense to talk of large agglomerations of diverse countries as if they were part of a bloc. I never thought BRICS was a particularly meaningful category, for instance.
There are enormous differences even within Southeast Asia that'll surely remain for many years or even become more pronounced. eg. even neighbouring countries like Myanmar, Thailand and Laos face huge disparities in living standards, purchasing power, diversification and politics that will remain or even enlarge. Laos will never become a major manufacturing destination and faces an entirely different future to, say, India. Likewise I don't think it makes much sense to talk of the Philippines as part of any grouping or category alongside the likes of Bangladesh.
So i'm sure some countries in South and Southeast Asia will do very well in coming years and attract a lot of investment, probably as alternative destinations to China in value chains as globalisation evolves. Bangladesh, India, Vietnam and Indonesia stand out. Some face a much more uncertain future, like Laos and Myanmar. Cambodia, like Laos, is only just about to emerge from official least developed country status and has political challenges. Myanmar's LDC graduation status is on hold due to the civil war. Divergences will enlarge, not reduce.
And regarding my second point, SE Asia now trades more with itself than with the rest of the world. India's enormous domestic market and relative lack of export-focus makes it somewhat inward-focused. As I pointed out, Bangladesh is not internationally integrated except for its ready-made garment industry. So I suspect regionalism and in some cases nationalism may be the name of the game, not globalisation as we've known it.
Ideas that aren't being talked about anywhere else. That's why Noah is worth reading.
If American protectionism is not primarily economic ("you're stealing our jobs unfairly") but is instead strategic ("you're an enemy who we don't want to subsidize"), should that alter the US' tariff strategy? Do we even have the ability to limit shipments based on who benefits from the sale instead of where they happen to be made?
Big fan of your blog. Been glancing from an observer perspective for many years. Have a question since you have beem studying the development of many countries.
Which country has punched above its weight the most of any country?
What i mean, is that european and east asian countries tend to be wealthy, so its not as much a shock when a country with a similar culture/make up tends to rise( ie rise of China and Poland).
But what country has gotten wealthy when many countries similar to it in culture/makeup/situation tends to be poor?
At a first pass, i would say some examples could be Malaysia, Botswana, Bahamas, Panama. Figuring out what country "punched" above its weight the most and how they did it would be interesting to study and analyze. Lessons applicable for all.
Maybe a similar study could be done within states.
Fascinating! I'm wondering about global warming. If annual global temperatures continue to increase, the tropic zone will become uninhabitable in a few decades.
It’s not by accident Microsoft is building datacenters in so many of these countries. American wants to train the cheap labor of the AI workforce of tomorrow. Certainly America’s foreign investment will continue to influence in this region, even though economically it will only become more powerful in its own right.
Meanwhile most Americans have a limited idea of what is and what goes on outside of its borders. Especially when it comes to India and ASEAN. What do you suppose that is?
Super interesting. I had never thought of this region as a future economic power house, but as soon as you said it I thought “of course!”. Huge populations, lots of resources, young populations, and the countries that have avoided wars have every chance for economic booms with investments from the US and China. It seems like a lot of growth potential is there, guess only time will tell if it actually pans out.
What are your opinions on the risk that ISIS and other terrorist groupies in SEA, if they may have an effect on all of this? Let’s not forget they have a foothold in Indonesia and Malaysia.
I don't think they're going to be a big deal in Indonesia or Malaysia. Terrorism has always been less of a problem in Southeast Asia than in the Middle East, North Africa, or Central Asia. Pakistan-supported terrorism in India may continue to be a problem, though. And I'm not sure about Bangladesh.
Isn't MENA (up to and including Pakistan) screwed up more by the Arab custom of FBD marriage (and its consequence of society being splintered into clans, hindering nation-building) than by the Islamic faith itself?
War between the US & China one of the main risks Apple and its shareholders face. And they don’t have great options for moving manufacturing out of China. They’ve tried to do a bit of it in India but from what I’ve read those efforts haven’t gone too well.
Given that you've linked a story in Feb 2023 while Noah's linked stories from Dec 2023 onwards, it does sound like there have been some solutions put in place to resolve cultural andings, adaptation to much stricter labour laws (than what's found in communist China of all places) and they're slowly but surely getting Indian workforces to be more productive even if they can't yet be compared to the production efficiency of factories in East Asia. However, a bulk of the main components will continue to be manufactured in Taiwan and China until there's knowledge transfer in India which may or may not happen. Tho there's really no other market like India that could replace China as a labour pool. Trump tariffs will accelerate things.
I want to pronounce it like “sassy”
For what it’s worth I agree. Sa-see-uh.
As someone named Sassy from SASEA, I like this idea
Very interesting write-up, thanks. Especially enjoyed the insight that tariffs could be pro-globalisation.
Re: Skylines'
I was in Saigon in 1967 and took many photos around town. https://qq0u.app.link/e/Ro04bohOhU
I went to Google Maps to see what it looks like now. Wow! I also went looking at other skylines.
Re: Populations
I remember the panic over the book The Population Bomb.
I also remember a talk by an agronomist that India was one failure of the monsoon away from mass starvation.
Damn we were fed so much bullshit those days.
Consider the possibility that the reason these things didn't pan out was because we were "fed so much bullshit". I truthfully hope that in 30 years or so people will be saying the same thing about global warming.
Expect global warming to be a top 5 news story going forward:
A. Rising seas will drive Florida and Gulf coasters away because they will not be insurable.
B. Ditto on Wildfire areas in the West.
C. Mix in some century level flooding East coast and Midwest.
D. Stir in some electric grid meltdowns from extended heat in Texas and west.
E. Water water everywhere where but where need it in farming heartland
The Population Bomb was written in 1966-67 and published in 1968, after tens of millions of people had died of famines in the '30s, '40s, '50s and '60s. The widespread adoption of improved agricultural techniques and use of hybrid varieties like dwarf wheat in India and hybrid rice in China ("The Green Revolution") did not take hold until the late 1960s through the 1980s, avoiding many of the catastrophic food shortages predicted in the book.
Don’t you think it’s because Western powers dictated the outcomes of these places? GB had their hands in everything, and certainly Kissinger is largely responsible for the delay in their development… what with the famines and all.
Interesting story as always. No doubt SASEA will benefit from China decoupling. However, from a US perspective, I wonder if Mexico/Central America will be a bigger factor. Note the biggest investment from China is Mexico. Right now, both Mexico and Costa Rica are growing rapidly in manufacturing.
Mexico will also be big! But at the end of the day, SASEA is just 20 times Mexico's size...
agree... though I think it will end up exporting to itself and perhaps to Europe. we will see. I see Mexico/Latin America being a bigger impact to the US. Right now, in my world (electronics), packaging is the only thing which is really visible (largely because of Intel), and parts of that will move to central America. The chips act was actually extended to include Costa Rica for such purposes.
Frankly, all of Latin America.
Good piece, thanks. Maybe a bit too hopeful, though?
Malaysia and Thailand have been important offshore manufacturing and assembly locations for tech for decades. Philippines and Indonesia have also been used by American companies for decades, though initially in lower tech fields (sewing sneakers, etc), but they are moving up the value chain. Bangladesh has been a fast mover. Of course these populous counties have long been important target markets for US consumer product companies (fast food, soft drinks, etc). Guess what I am saying is that none of this is new. American companies were active in these countries before the big China investment boom and it is natural for them to expand production there as a China hedge (though none of them offer the scale that China can- not even India). The state is too weak and corrupt (in a different way than China - think of Italy as a place to do business).
What is new is China investing in offshore assembly in these countries as part of a tariff/content-washing exercise(as you note in batteries). Mexico will also be a big beneficiary. Chinese investment and influence in these countries- especially in Indonesia, Malaysia, Thailand, Pakistan could be larger than American investment. Vietnam, India and the Philippines (for now) are likely to be circumspect about too much Chinese investment, but money talks. Investing in overseas factories and natural resources is a way for China to diversify its reserves away from financial assets and also secures supply chains and alliances (countries as unwilling to sanction or blockade China as India is unwilling to sanction Russia).
SASEA is not going to be an American/European sphere (SEATO didn’t end well) and the Chinese pay better bribes than even the Europeans. The bad loans of the Belt and Road and other initiatives left a bad taste but FDI (in factories and JVs) is likely to be better received (though locals don’t always like working for the Chinese any more than Arizonans like working for the Taiwanese).
Thought-provoking piece but I have two questions:
1. Is South Asia and Southeast Asia a thing? I've been to Bangladesh many times and am struck by how disconnected its economy is, how high many tariffs are (eg. a 250% effective rate of protection on biscuits) and the extent to which, so far, it's just not part of wider regional value chains. It didn't even have any bilateral trade agreements until it signed one with Bhutan a couple of years ago. It's not part of RCEP although it might need to be in future. India-Bangladesh relations are also strained.
I also lived in SE Asia for several years and it clearly has very little to do with South Asia. The incomes of most people, internal dynamics, trade relations and technological sophistication just aren't the same. So yes, South Asia might be growing fast and getting more investment, and yes, SE Asia will continue to mop up investment from China and from nearshoring by US or European companies, but I'm less convinced that the two stories are connected or that there's any such emerging regional bloc. Rapid SE Asian growth is also obviously a long-standing phenomenon.
2. Surely faster Asian regional growth is regionalism, not globalisation? Some of those who sound the death-knell of globalisation say exactly that regions are on the rise, and that hyper-connected, globally footloose capital and labour will now become more regionally confined. As you say at the beginning, these people think that these blocs will compete with one another rather than cooperate internationally.
I think a common mistake people make is to think that in order for the countries of a region to be economically integrated with *the world*, they first have to be economically integrated with *each other*. This isn't so! East Asia is a good counterexample.
I'm sure they do make that mistake - have come across it myself several times. My point was more that these acronyms can be overdone; that there isn't always much coherence and it often doesn't make sense to talk of large agglomerations of diverse countries as if they were part of a bloc. I never thought BRICS was a particularly meaningful category, for instance.
There are enormous differences even within Southeast Asia that'll surely remain for many years or even become more pronounced. eg. even neighbouring countries like Myanmar, Thailand and Laos face huge disparities in living standards, purchasing power, diversification and politics that will remain or even enlarge. Laos will never become a major manufacturing destination and faces an entirely different future to, say, India. Likewise I don't think it makes much sense to talk of the Philippines as part of any grouping or category alongside the likes of Bangladesh.
So i'm sure some countries in South and Southeast Asia will do very well in coming years and attract a lot of investment, probably as alternative destinations to China in value chains as globalisation evolves. Bangladesh, India, Vietnam and Indonesia stand out. Some face a much more uncertain future, like Laos and Myanmar. Cambodia, like Laos, is only just about to emerge from official least developed country status and has political challenges. Myanmar's LDC graduation status is on hold due to the civil war. Divergences will enlarge, not reduce.
And regarding my second point, SE Asia now trades more with itself than with the rest of the world. India's enormous domestic market and relative lack of export-focus makes it somewhat inward-focused. As I pointed out, Bangladesh is not internationally integrated except for its ready-made garment industry. So I suspect regionalism and in some cases nationalism may be the name of the game, not globalisation as we've known it.
Ideas that aren't being talked about anywhere else. That's why Noah is worth reading.
If American protectionism is not primarily economic ("you're stealing our jobs unfairly") but is instead strategic ("you're an enemy who we don't want to subsidize"), should that alter the US' tariff strategy? Do we even have the ability to limit shipments based on who benefits from the sale instead of where they happen to be made?
What a shame if competing Left-Right versions of anti-neoliberalism, shut the US out of trading with this group of countries.
Hey Noah,
Big fan of your blog. Been glancing from an observer perspective for many years. Have a question since you have beem studying the development of many countries.
Which country has punched above its weight the most of any country?
What i mean, is that european and east asian countries tend to be wealthy, so its not as much a shock when a country with a similar culture/make up tends to rise( ie rise of China and Poland).
But what country has gotten wealthy when many countries similar to it in culture/makeup/situation tends to be poor?
At a first pass, i would say some examples could be Malaysia, Botswana, Bahamas, Panama. Figuring out what country "punched" above its weight the most and how they did it would be interesting to study and analyze. Lessons applicable for all.
Maybe a similar study could be done within states.
This was a classic Noah banger. I wasn't ready for that!
Interesting summarization of the region, but I suggest you pronounce it as "sassy" instead as it's easier to remember.
Fascinating! I'm wondering about global warming. If annual global temperatures continue to increase, the tropic zone will become uninhabitable in a few decades.
It’s not by accident Microsoft is building datacenters in so many of these countries. American wants to train the cheap labor of the AI workforce of tomorrow. Certainly America’s foreign investment will continue to influence in this region, even though economically it will only become more powerful in its own right.
Meanwhile most Americans have a limited idea of what is and what goes on outside of its borders. Especially when it comes to India and ASEAN. What do you suppose that is?
Super interesting. I had never thought of this region as a future economic power house, but as soon as you said it I thought “of course!”. Huge populations, lots of resources, young populations, and the countries that have avoided wars have every chance for economic booms with investments from the US and China. It seems like a lot of growth potential is there, guess only time will tell if it actually pans out.
What are your opinions on the risk that ISIS and other terrorist groupies in SEA, if they may have an effect on all of this? Let’s not forget they have a foothold in Indonesia and Malaysia.
I don't think they're going to be a big deal in Indonesia or Malaysia. Terrorism has always been less of a problem in Southeast Asia than in the Middle East, North Africa, or Central Asia. Pakistan-supported terrorism in India may continue to be a problem, though. And I'm not sure about Bangladesh.
Isn't MENA (up to and including Pakistan) screwed up more by the Arab custom of FBD marriage (and its consequence of society being splintered into clans, hindering nation-building) than by the Islamic faith itself?
War between the US & China one of the main risks Apple and its shareholders face. And they don’t have great options for moving manufacturing out of China. They’ve tried to do a bit of it in India but from what I’ve read those efforts haven’t gone too well.
I've read the efforts are going well in India and that Apple and its suppliers are doubling down.
https://www.reuters.com/markets/deals/indias-tamil-nadu-44-bln-deals-with-investors-such-tata-pegatron-2024-01-07/
https://www.bloomberg.com/news/articles/2023-12-13/foxconn-adds-1-billion-to-investment-in-giant-apple-india-plant
https://www.cnbc.com/2024/04/22/why-apple-is-betting-big-on-india.html
https://economictimes.indiatimes.com/industry/cons-products/electronics/apples-make-in-india-plans-get-bigger-aims-to-build-every-one-in-four-iphones-in-india/articleshow/105833993.cms?from=mdr
Can you show me what you're reading?
I don't recall exact links, but this story sounds representative: https://www.firstpost.com/world/apples-india-production-faces-quality-issues-about-50-per-cent-of-iphone-housings-produced-rejected-12170362.html#:~:text=housings%20produced%20rejected-,Apple's%20India%20production%20faces%20quality%20issues%2C%20about%2050,of%20iPhone%20housings%20produced%20rejected&text=Tata's%20Apple%20factory%20at%20Hosur,fail%20Apple's%20quality%20control%20check.
Maybe they've resolved the issues?
Given that you've linked a story in Feb 2023 while Noah's linked stories from Dec 2023 onwards, it does sound like there have been some solutions put in place to resolve cultural andings, adaptation to much stricter labour laws (than what's found in communist China of all places) and they're slowly but surely getting Indian workforces to be more productive even if they can't yet be compared to the production efficiency of factories in East Asia. However, a bulk of the main components will continue to be manufactured in Taiwan and China until there's knowledge transfer in India which may or may not happen. Tho there's really no other market like India that could replace China as a labour pool. Trump tariffs will accelerate things.