Asian Century? Pacific Asia’s pre-1997 high growth

Overview of East Asia’s Growth Average growth rate higher than those of any other region in the world Superior performance of the eastern half of Asia –Japan, South Korea –China’s mainland, Hong Kong, Taiwan –Indonesia, Malaysia, the Philippines, Singapore, and Thailand

Overview Large degree of variance between the individual economies

Geographical division

Growth in East Asia Japan’s economy took off in 1960s NIE’s (newly industrialized economies) –Hong Kong, Taiwan and Korea “very high” growth in the period “outstanding” growth in the period –Singapore: opposite pattern Irony of Myanmar and the Philippines

Growth in NIE’s NIE’s accumulated capital and increased labor participation at a much faster rate than other economies The increase in these two factors far from fully explains their exceptional growth rates productivity growth also accounts for a significant fraction

Growth in NIE’s: I Growth of labor participation “high” for the NIE’s in general

Growth in NIE’s: II Growth of capital Hong Kong: “high” Taiwan & Singapore: “very high” Korea: “outstanding” Public investment/GDP similar to other developing economies Private investment/GDP much higher

Growth in NIE’s: III Productivity growth Higher than that of United States Proportion of growth of GDP per person that is explained by productivity growth was not systematically different from those of Japan and the United States

Paper tigers? Soviet Union growth pattern –mobilization of resources Asia growth pattern –two-thirds of the growth is input-driven –the remaining third is attributable to increased efficiency or total factor productivity (TFP)

The World Bank study To international technological progress South Korea was keeping pace Hong Kong, Japan, Taiwan and Thailand were catching up The investment-driven economies of Indonesia, Malaysia, and Singapore fell behind

Increase in Productivity Imports of foreign knowledge and technology Expanding education opportunities Better organization Improved work practices

Increase in Productivity Interlocking cooperation free enterprise government financial intervention guidance-minded technocratic bureaucracy

Korea’s growth path High rates of saving with funds channeled into the industrial sector Strong export orientation Strict limits on “non-essential” imports and direct foreign investment Strict zoning laws and other restrictions on the distribution system

Hong Kong Entry port to China

State Intervention Ability Low High High India, Philippines Japan, Taiwan Intent (weak) (strong) U.S., U.K Hong Kong Low (minimalist) (market driven)

Asian Values? commitment to hard work sense of thriftiness emphasis on education well-defined family structure filial piety respect for political authority society above self

Political stability Strongman rulers –North Korea, South Korea, Singapore, Malaysia, the Philippines, Indonesia... Single-party dominance –Japan, Taiwan, Malaysia, Singapore … Trading civil rights and freedoms for economic growth –presumption of basic material well-being