Development of Agribusiness Enterprises - Asian Productivity ...

Past agro-industrial development was brought about by diversified high-value added
products. The application of modern agribusiness technology and collective bargaining
power made it possible to earn a good profit. However, due to the highly competitive
situation faced by the producers, organized collaboration is desirable.
COMPETITION AND COOPERATION
WITHIN AND OUTSIDE THE REGION
During the 1960s and 1970s, the Republic of Korea, Taiwan, Hong Kong, Singapore
and other countries within the region showed remarkable economic development. Taiwan
and the Republic of Korea were agricultural countries without any specific modern industry
up until the 1950s, after which they rapidly became industrialized and developed their
mutually-related industrial sectors.
At first, the ASEAN countries and NIEs were dependent on Japan, the United States
and European countries for capital and technology as well as acting as production
subcontractors for developed countries. However, a gap in labor costs became clearly evident
with the creation of a vertical division in the cooperative relationship. Also, differentiation
of industry developed between ASEAN agricultural countries and NIEs.
In February 1977, the ASEAN Preferential Trade Agreement was signed. It was
implemented in the following year, focusing on primary products. In November 1983, with
the signing of the Business Merger Agreement, favorable measures were introduced for
applying lower tariffs on products. In the mid-1980s, efforts to attract foreign capital, such
as the easing of restrictions on foreign currencies, resulted in increased foreign direct
investment.
During the latter half of the 1970s, the Republic of Korea and Taiwan became
industrialized to the point where the GDP share of manufactured products in total GDP
amounted to more than 30 percent (the same proportion as in industrialized Japan). At that
time, manufacturing in each ASEAN member, except Indonesia, accounted for a GDP share
of some 30 percent or higher, indicating the formation of an industrial sector. After the
1980s, industrialization in ASEAN countries shifted markedly from import-substitution to
an export-oriented industry.
From 1985, the yen (which remained basically strong against the US dollar from the
late 1980s to mid-1995) and, from 1987, the strong NIE currencies strengthened the relative
competitive power of ASEAN industrial products. Consequently, Japanese and NIE
companies actively invested in ASEAN countries, and the products manufactured by those
companies were exported to Japan and NIE countries.
Between 1988 and 1992, a large share of the increasing imports by Pacific rim
countries came from NIEs and Southeast Asia. The biggest export partners of ASEAN and
China were the NIEs, which exported more to the former than to Japan or the United States.
Statistics for 1992 showed that NIEs were the biggest export target region, exceeding Japan
and the United States. Meanwhile, in terms of export volume in the Asia-Pacific rim region,
the largest portion of imports by China came from NIEs (Figures 2 and 3).
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