When one speaks of modernization, one usually refers to physical change such as the springing up of new buildings, roads, transportation system, and the introduction of machines and new technologies into daily life. In this sense, modernization can be seen as the industrial progress of society, conventionally signifying the material transition of a developing society to a developed one. The modernization of society has European origins. The Industrial Revolution of Britain, usually dated from 1760 to 1850, resulted in numerous technological innovations like the steam engine, the combustion engine, the spinning mule, as well as the expansion of railroads, to increase efficiency in product output and delivery. The modernization of Southeast Asia, a twentieth century phenomenon, has taken place in an era of globalization and global capital, both of which have been key factors that have shaped the development of the region.

ECONOMIC DEVELOPMENT OF SOUTHEAST ASIA

Asia's economic development in the twentieth century came in three waves. The first regional economic wave began in Japan from the mid-1950s to the early 1970s. This led to the regionalization of Japanese capital, which helped engender the second wave. The second regional economic wave swept through Hong Kong, Taiwan, South Korea, and Singapore — collectively known as the “Asian Tigers” — from the mid-1960s to the 1980s. The third regional economic wave took place from the 1980s to the mid-1990s and included Indonesia, Thailand, Malaysia and, to a lesser extent, the Philippines — popularly known as the “Asian Dragons”.

Cheaper labour, raw goods, and lower business costs offered by Southeast Asian countries were key factors in attracting global capital. For Indonesia and Malaysia, both oil- and gas-producing nations, the oil bonanza helped sustain their early development policies while Singapore leveraged heavily on its electronics industry. Thailand's abundance of staple crops and agricultural industry was a major contributor to its growth. Meanwhile, the manufacturing industry played a key role in all Southeast Asian countries. This combination of high-performing industries, complemented by global demand, resulted in the “Asian miracle” that was, in turn, perpetuated by undervalued currencies pegged to the US dollar and became the catalyst for industrialization.