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Asian Century?
East 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 1960-1975 period
• “outstanding” growth in the 1975-1990 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
Singapore
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