Institutional frameworks and economic activity: A comparative analysis of regional economies in Thailand, Malaysia and the Philippines

Abstract

Abstract: It is increasingly recognised that both formal and informal institutions could be important variables in explaining the diversity of capitalist systems. However, less is known about the relative importance of regional institutions for regional economic activity and regional development, especially in developing countries. This article analyses the relative importance of regional institutions to regional capitalist systems in Southeast Asia, using the comparative institutional approach of ‘business systems’. Two comparisons are made that enable an analysis of the relative importance of regional institutions: one between two regional economies in the same country (Cebu and Negros Oriental in the Philippines) and one between two bordering regional economies in different countries (Satun in Thailand and Perlis in Malaysia). We investigate four sets of economic institutions: the extent of alliance coordination of supply and demand, the extent of collaboration between competitors, the extent of alliance coordination of sectors and access to finance. The results suggest that regional economic institutions are stronger in agricultural areas with relatively weak national economic institutions and that the presence of strong and enabling regional economic institutions is one of the factors that lead to taking advantage of favourable agricultural conditions, to economic growth and, ultimately, to catching up.