Human capital investments have played a crucial role in the early economic success of East Asian economies. Given Southeast Asia's rapid growth, the claim has often been made that these countries too have benefited from high rates of human capital investment. This claim, however, is less robust for Southeast Asia, and even for the Southeast Asian “Miracle” economies, than for Northeast Asia. In an important region-wide survey, Anne Booth (2003) described the claim that the Southeast Asian economies invested heavily in education at an early stage and in an equitable manner as “gross over-generalisation.” Even among the eight “Miracle” economies, she points out significant differences in the timing and extent of human capital investments between those in Northeast Asia (Japan, South Korea, and Taiwan) and those in Southeast Asia (Singapore, Malaysia, Indonesia, and Thailand). In fact, human capital investments in Southeast Asia started late and have generally not achieved as much as in Northeast Asia: educational attainment has been lower while inequality in access to education has been severe (Booth 2003; Khoman 2005).

Thailand, Malaysia, and Indonesia have made impressive progress in economic growth and poverty reduction, but their movement up the production quality ladder slowed after the Asian financial crisis. They still occupy predominantly low-value-added niches of manufacturing such as assembly and processing. Eichengreen et al. (2013) have presented evidence that growth slowdown or the middle-income trap is less likely in countries where the population has a relatively high level of secondary and tertiary education and where high-technology products account for a relatively large share of exports. If this is so then it seems clear that for Thailand, Malaysia, and Indonesia the lack of high quality human capital helps to explain their growth slowdowns. By the early 1990s, most governments in the region had conceded that their human capital investments had fallen short of what is required to sustain a high growth rate.

In the most rapidly growing Southeast Asian economies, the onset of the Asian crisis in 1997 was at least partly a consequence of underinvestment in education that impeded the transition from labor-intensive to more skill-intensive activities as real labor costs began to rise. Since recovering from the crisis, Southeast Asian countries have continued to make progress in expanding overall access to education and raising average educational levels, following trends established in the pre-crisis era.