Essay — Significance of Government Intervention (26/30)

How significant was government intervention to the economic development of theindependent Southeast Asianstates? Every Southeast Asianstate’spursuit of economicdevelopment —definedbyitsthreegoalsof growth, nationalismand equity—involvedsomegovernment intervention, takingtheformof economic planning, policiesandparticipation. Theextent of significancevarieddependingon the regime’s ideological leaning, the specific economic aimand the type of intervention:government intervention was especially consequential in socialist economies. Additionally, itwas consistently essential in the pursuit of economicnationalismandequity, andintheformof planning and policies. Conversely, the significance of other types of interventionfor otheraims —particularly state economic participation to stimulate growth—woulddeclinebythe1980s. While it was not the sole determinant of development, government intervention wasultimately a highly significant factor: it was markedly beneficial or detrimental based on theextent of interventionandthemotivationsunderlyingit. Between capitalist and socialist states, government intervention was more significant in theeconomic development of the latter given their structure of a command economy. Sincesocialism demands the abolition of private property and the free market, the governmentmust become the principal participant in the centrally-managed economy. InBurma, NeWinpassed the 1965 Lawto Invest Powers to Construct the Socialist Economy, legalising statecontrol over all economic activities and resources. Additionally, statecorporationslikeTradeCorporation No. 1 and The People’s Stores held total monopolies on distributing rice andconsumer goodsrespectively. Withthegovernment directlycontrolling60%of manufacturingand 90%of legal trade by 1965, Burma’s average annual GDPgrowth of 4%from1961-80was largely attributable to the state’s economic participation. In North Vietnam, more than90% of the industrial and agricultural sectors were nationalised, making the state’sintervention key to the growth of overall industrial output by 15%per annum. In the Southafter reunification, the government abruptly nationalised all major private enterprises inMarch 1978 and seized privately-owned land, agricultural equipment and livestock. Withnear-complete government control over agriculture and industry, government interventionwas largely responsible for the limited 18.7% and 17.3% increases in agricultural andindustrial output under the 2nd Five-Year Plan. While nationalisation waslimitedtostrategicindustriesincapitalist economies, suchasstatecontrol of oil andshippingunder Article33inIndonesia, direct state participation in all sectors of socialist economies made governmentinterventioncomparativelymoresignificant totheir development.

This greater importance can be further explained by the essential role governmentintervention played in achieving economic nationalism and equity, which constitute largerideological priorities in socialist states. Since no