Asian Century?

1. Asian Century? East Asia’s pre-1997 high growth

2. 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

3. Overview • Large degree of variance between the individual economies

4. Geographical division

7. 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

8. 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

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

11. 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

13. 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

15. 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)

16. 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

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

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

19. 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

20. Hong Kong • Entry port to China

21. Singapore

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

23. 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

24. 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