A New Resource Curse? Impacts of China’s Boom on Comparative Advantage and Resource Dependence in Southeast Asia

SummaryDue to China’s rapid growth and integration with global markets, Southeast Asia’s poorer economies are losing comparative advantage in labor-intensive manufacturing and gaining it in natural resources. The first trend may pose a threat to future industrial expansion. The second will generate short-run export windfalls but may not be environmentally sustainable. What are the implications for long-run growth, particularly in the poorest economies, and especially in light of weak institutions for environmental and natural resource management? Rapid resource depletion and reduced industrial growth could expose countries to a period of slow economic growth, as predicted by the “natural resource curse” hypothesis.