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The sustained success of state-led yet also market-supporting economies
such as Singapore and on a much larger scale China, ignited the “Asian
values” debate, suggesting the fallacy of the belief that marketization
leads to liberal democracy. There has also been a continuing long-term
3
decline in international confidence in democracy, especially among the
young. This loss of confidence has been driven to a large extent by
4
on-going problems of an uncertain and changing global economy,
accelerating after the Global Financial Crisis of 2008.

The political economy challenge now facing Asian emerging
economies may be stated as follows. In a world of shifting globalization
and new disruptive technologies, there is a potential dissonance
between the imperatives of the long-term structural transformation of an
economy, and ensuring the basic elements of sustainable liberal
democracy. This is of particular relevance to Southeast Asian economies
experiencing stalled growth and the middle-income trap, as well as
political uncertainty in various forms. The nature of the challenge can be
summarized in five propositions, which will be discussed in turn, with
Thailand as a ready example:

1. Sustainable liberal democracy, more generally a stable political
system, must rest on firm economic foundations.

2. For sustained growth and development, economies faced with
middle-income trap such as Thailand need to undertake long-term
structural transformation.

3 See Kishore Mahbubani, 2001. Can Asians Think?: Understanding The Divide
Between East And West, Steerforth Press, Hanover, New Hampshire; see also Joshua
Kurlantzick, 2014. Democracy in Retreat: The Revolt of the Middle Class and the
Worldwide Decline of Representative Government, Yale University Press, New Haven,
Conn.; and Nicholas Borroz, “State-run economies increasingly adore the free market”
Washington Post, January 26, 2018.
4 Economist Intelligence Unit (EIU), 2017. Democracy Index 2016: Revenge of
the “deplorables”. The Economist Intelligence Unit Ltd

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