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Boosting economic transition in South-East Asia

EU-funded researchers and their partners in Cambodia, Laos and Vietnam are studying the mechanisms, regulatory incentives and challenges involved with knowledge-based development.


Cambodia, Laos and Vietnam, three neighbouring countries in South-East Asia, have all seen fast economic growth and falling poverty since the 1990s. At around 7 % in recent years, their annual real gross domestic product (GDP) growth rates are among the highest in the world. The International Monetary Fund’s October 2019 ‘World Economic Outlook’ predicts real GDP growth of 6.5 %, 7 % and 6.4 % for Vietnam, Cambodia and Laos, respectively, for 2019. Yet, these countries’ shift from central to market-oriented economies poses several challenges involving the economic and regulatory environment. The EU-funded IKID project not only addresses these issues but also aims to identify the opportunities presented by the transition of the three countries. “The transition setting provides unique momentum for advancing the regulations and institutions in those countries so that knowledge-based development is supported,” says IKID project coordinator Aaro Hazak, professor at the Tallinn University of Technology in Estonia. Quoted in a news article on the European Commission website, Prof. Hazak points to the benefits of using knowledge during a transitional phase of economic development and emphasises its role in long-term sustainability and prosperity. “Hazak says the Estonian experience of reforms in the 1990s provided essential insight into how to align institutions to support innovation, modern technology and top-notch skills,” as noted in the same article. Referring to the cooperation between IKID participants, Prof. Hazak adds: “It provides ample learning opportunities for the Southeast Asian countries in transition.” “The lessons from Central and Eastern Europe coupled with those from Switzerland – via the University of Lausanne – have led to the creation of an essential toolbox for Cambodia, Laos and Vietnam,” according to the same article. “The hope is that the lessons learned through IKID will help advance and promote key regulations and institutions in all three countries so that knowledge-based development is strongly supported.”

Knowledge economy

The ongoing IKID (Institutions for Knowledge Intensive Development: Economic and Regulatory Aspects in South-East Asian Transition Economies) project was launched to examine the causes and consequences of the differences in the evolution of knowledge intensity of economies, focusing on transition countries in South-East Asia. The project website states: “The project builds on new institutional economics, development economics, industrial organisation and modern concepts in regulatory efficiency and justice in combination with frontier empirical research methods (including advanced stochastic frontier analysis and dynamic panel data estimation techniques) in investigating micro and macro level institutional factors and regulatory efficiency.” The IKID researchers attended several seminars, training events and paper discussions to come up with tailor-made strategies. Using economic data, they explored how to get people with the right skills to contribute to knowledge development. IKID partners hope that the project will have an impact beyond the borders of the countries covered. “In addition to the research outcomes and policy implications resulting from the project, development of a mindset of European-Asian academic cooperation and excellence-oriented research is key,” says Prof. Hazak. For more information, please see: IKID project website