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