Sectoral Development in Southeast Asia: Agriculture, Non-Renewable Natural Resources, Manufacture, and Services

Abstract

This paper discusses the development of four production sectors of the economies in Southeast Asia since the end of the Second World War: agriculture, non-renewable natural resources, manufacturing, and services. First, although Southeast Asia has experienced sectoral transformation toward manufacturing and service sectors, agriculture and natural resources remain important for this region, providing employment, foreign exchange, and raw material to resource-based manufacturing industries. Second, structural transformation in Southeast Asia is not only the change from agriculture to manufacturing and services, but there are also intra-sectoral changes. Third, one common factor that influences the development of agricultural, manufacturing, and service sector is the advent and growth of production fragmentation and tradability that allow each process of production to be performed in different locations. Finally, Southeast Asian economies became more diversified in the early stage of development before reversing to more concentration in the later stage. At the center of this dynamic is openness to trade and finance with the global economy.