Money Matters: Democratization and Economic Growth in Southeast Asia Report

This report focuses on 10 Southeast Asian economies and how the distribution of monetary capital to each country is influenced by the degree to which it has adopted liberal democratic institutions and systems. It argues they need a new political economy that prioritizes financial inclusion, investment attraction, marginal productivity, trade expansion, political stability, and talented leaders who are able to facilitate the achievement of these goals.
Motorbike riders with face masks are stuck in traffic during the morning peak hour in Hanoi, Vietnam. Motorbike riders with face masks are stuck in traffic during the morning peak hour on May 19, 2020 in Hanoi, Vietnam.

This report was published by the Center for Strategic and International Studies on April 12, 2023, and is reprinted with permission from CSIS.

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This report focuses on how Southeast Asian economies can more effectively attract the vast monetary capital circulating in today’s global market by embracing a new political economy that prioritizes financial inclusion, investment attraction, marginal productivity, trade expansion, political stability, and talented leaders able to facilitate the achievement of these goals.

This report contends that for this new political economy to flourish in Southeast Asia, the distribution of power and other essential public goods will not be effective without the meritocratic selection of talent for positions of leadership and governance—a fundamental dimension of robust liberal democracies. More monetary capital through foreign direct investment (FDI), borrowing, and trade will allow Southeast Asian governments to bolster their domestic liberal democratic systems—enhancing their rule of law, transparency, ease of doing business, and political stability.

These factors increase countries’ trustworthiness, which will then enable them to consistently benefit from the tremendous global financial capital that has historically failed to funnel into the region. Despite the fundamental challenge of finding the right balance between talent and power to promote liberal democratic values and institutions in order to attract monetary capital, one can be cautiously optimistic about Southeast Asia’s prospects in the long run.

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