Structural Transformation in East Asia

Japan

NIEs

ASEAN4

Latecomers

Latestcomers

Country

Time

Garment

Steel

Popular TV

Video

Digital Camera

1

3

2

*

Export02

Manufactured exports (SITC5,6,7,8)

Vietnam (Million US$)Indonesia (Million US$)Malaysia (Million Ringgit)Philippines (Million US$)Thailand (Million Baht)China (Million US$)Hong Kong (Million HK$)Korea, Rep. (Million US$)Myanmer (Million Kyats)Singapore (Million S'pore$)Taiwan (Billion New Taiwan$)Japan

Total exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. MfgTotal exp.Manu%ChemicalsMaterialsMachineryMisc. Mfg

1960841363362486142559321065.53477

19617843238670999719424010543309

1962682326050995291913541261.13417

1963696333065396762031851287.63475

196472433824101233922501171110.22772

196570837836981294125631761072.23004

19666793846826140992681251925.83374

19676653727820141662388322589.53491

19687314123858136792340455530.63891

19698545055854147092429621627.14741

19701108516310471477223078345134756

19711234501710981727527831069594.65371

19721777485411012249136921624653.56149

19733211737218853222658763226640.48907

197474261019527264979971084460911.814155

1975-----71022.4%24923221923130.4%791624573529229416.3%22238121014500719.6%2436419573158276892983174.3%1923079333215565508181.6%691495762182113224.5%1643-11275841.8%47610862895880201.581.3%3.947.739.373.016,545,31495.4%1,152,9685,199,8858,132,5671,292,248

1976-----85472.1%287453271344226.5%822133740609257417.9%27240251696079721.8%26893361231243269434155676.2%2354308479122322771587.7%11423471383292516282.9%740-11626744.7%610132941071232309.985.1%6.572.865.1119.219,934,61896.1%1,111,9555,594,94010,650,4051,792,365

1977-----108533.5%6023660291495926.5%8723241001545315118.3%51255542167119823.5%298119631713275075204483475.6%30342015702236681004784.9%22130321853342616005.0%871-12008943.0%716160249171402355.185.0%8.279.280.0134.321,648,07096.5%1,158,0305,551,09612,034,1952,154,636

1978648----116434.2%5533271311707430.7%10228251816496342522.2%59306753228306529.9%444174792719421399555390772.7%34546356403278151271188.5%329379627114414206625.8%12522--2298646.0%870226057151725468.485.7%8.9109.8109.4173.520,555,84196.6%1,076,8894,869,17111,720,2852,191,560

1979587----155905.3%64571116812422227.2%13133152535604460123.6%1124198846610817931.8%7222353239726149136147593470.8%43265099314375251505689.2%50448313236485425885.3%1134-33094046.2%1124284282172122579.387.3%12.2147.9136.6209.122,531,53996.2%1,332,4015,725,29112,080,7212,528,841

1980537----239513.9%846151091202817227.8%17236913238738578824.1%11853313261213319734.9%93629474761884671809948.6%1121399884128369824366.6%542773212375448141750590.2%75562523555522927337.5%-203-24145244.7%14183442110892572712.288.2%18.0163.5176.0270.629,382,47296.0%1,544,4637,074,55316,084,4823,509,883

1981467----251654.4%647771541212710927.7%19232813325700572225.3%10547616170415300131.1%1191269417662117312200748.4%131446111068364912216363.7%755860615043533812125490.4%64472324839650134535.4%3176-84429045.0%15563670117792919829.989.0%20.3189.3212.4316.333,468,98596.6%1,502,5007,426,58618,998,9904,408,564

1982595----223285.4%618171801412810828.3%23626264335754502124.2%9633617161215972831.0%1253265878293134042232145.9%117342171236363012738662.9%785831315074559962185391.6%67066506153653430364.5%4123-104447344.8%17223839115462832864.389.0%23.1187.8218.9339.734,432,50196.7%1,580,3707,710,42719,349,3374,652,444

1983588----211468.6%11913501332133277130.2%29430355653902500526.4%8636925461214647234.7%1673260028356147562222647.9%125143651221380416069962.1%10161106923328644002444591.4%67769577981672134207.4%24211-174615550.7%195636831467830841005.589.9%25.0219.7263.8395.234,909,26996.8%1,658,7916,876,39120,223,5895,038,764

1984665----2188810.6%17015652233723864729.8%427255573231196539126.4%10537141753217523735.9%21872918711959195582613948.2%136450541493469722144159.9%13121388433300840412924591.6%845737810462809331957.2%6211-145134051.3%246436251686534081204.791.0%30.7251.1339.0476.040,325,29497.0%1,805,5757,144,47524,335,2465,850,168

1985750----1858713.7%2101804984373801731.5%428309570591391462931.6%15146830953719336641.0%24403586016977240302735037.0%13584493772348623515252.7%12771291228554810903028391.7%936706411384837226545.4%27104-115017952.3%271735981656733781223.090.7%30.8263.8340.7474.041,955,65997.2%1,843,3486,903,71225,873,3436,149,496

198678929.2%105411651480520.2%2601984636783531938.8%605258790101500484234.2%24343439258723338344.9%33814339224851331663094244.2%173358861094494827653053.4%15021704233306957833471592.2%10688173116611109425149.5%57161-214898660.0%284036331890140421507.091.3%40.9307.1438.6589.7209,151.297.6%21,536.1182,693.4

198785428.5%105711751713625.1%2513267577324522541.5%7363710117012619572035.4%24546955375829985352.2%45285875135522577733943747.7%223585701741627337803449.5%251224157431551172084728192.6%1321101981690615349167914.2%6814412146026666.6%376245232627455561707.692.2%45.0343.6551.2634.4229,221.297.6%22,901.4200,756.5

1988103828.9%137022151921930.7%346428112611545526045.6%12214488156663830707436.4%25668767695340357054.9%48387686563789759804751651.4%2897104892769826849306942.2%420825844551041230876069693.4%187912645234581873221937.8%461112127905371.8%519965293793971111731.892.7%59.7357.6610.2578.3264,916.897.4%25,227.2232,686.3

1989194628.7%149114522215938.9%489617619617486782551.0%12335721219875621782140.4%279741940119651631557.0%645793563918011027095253854.7%32011089738741075557050937.5%534726996562351251806237793.5%204913735235901897228476.1%331171248711673.2%573770844314278151747.893.3%63.7363.2648.0555.1275,174.697.2%25,579.3241,850.2

1990240429.2%1810715752567537.9%596610235126907964655.2%12986320284187943818640.9%261742972137558981363.4%83321081511309131262516209155.7%37301257655881268663987433.5%665126995561241248066501693.8%251214357255451857329627.8%9205-179520672.3%597066514773385001802.893.5%74.8384.9705.2520.5286,947.597.0%27,774.6250,510.2

1991208717.5%88162712914243.1%810719563839289449761.6%166773603886610320884041.4%3047041210144072563065.4%139981208711756921641557184358.5%38181445671491662076588628.6%745428064595411236977187093.1%319016079299851764429324.6%16416910188073.5%668073205169792292040.893.4%93.8438.9799.4574.7314,525.597.0%29,994.8275,228.1

1992258116.0%119273033396749.6%75591831318557510365765.5%212388314541111504982443.6%2696831671165782464466.7%152031361532201331784748494080.0%434816135132193423492495323.8%768628316614371225267663293.1%4454184913255615875365511.0%1280111910335177.8%673271145693995932048.093.8%96.2435.7840.0548.4339,649.697.0%32,103.3297,278.2

1993298521.5%14160214483682353.6%82996682206703112123870.6%26391160058797125241137543.6%2628002119177393586271.5%203881775782811361899489174481.8%4623163921528238781104625020.1%776528009616971123428223693.4%4921206863695114233422811.1%21992124711947379.4%766377566964197682239.094.0%113.7488.2989.6512.7360,911.196.8%31,885.5317,479.7TotalFoodCrude MaterialMineralFuel

1994405428.2%12227988074005352.6%101094703048755015392174.6%40831390682200146091348345.0%30687429071982113760072.3%2417418959938077622738612100683.8%6236232182198549937117001317.9%841826455622111124729601393.6%6339229494706713504540511.8%22472436714732783.3%8418885694199111852456.093.9%143.6578.61113.3471.840497698.3%6894182625242544

1995544932.8%313508913154541852.1%1524104383828787618498775.7%562916340101995161321744743.4%343111638692245140631173.1%4301025435447553825578914878085.6%9094322403140754548134412716.2%9178257116814911530412505892.4%8944275686564613382504414.3%23464932616751586.1%999911614110007125522949.694.0%199.2684.41419.9468.241530998.3%7003168827902525

1996725637.3%6638241518474981552.6%1726107964999868819702676.7%625618290108930177142054343.6%353114150972368141211171.4%3870322507253675320744415104885.5%8877284983531256424139791714.3%8691245385936010719312971589.4%9148269596758412237548815.9%23865942517627284.7%988510072116262131033176.694.2%194.6723.41599.2475.544731398.3%7423189431942335

1997918547.9%10756375329795344443.3%187697024624694222089077.4%787819871123984193262522845.4%383111375342436180669971.5%6682327951770534724035918279286.9%10227344324370970467145594913.7%8077223505870710974913616488.1%10666290976811012032644715.9%34467350218561385.3%1113610402122474142603481.795.6%200.6809.71828.8489.450938098.3%8514236335202631

1998936046.5%9444180930074884845.4%209187734656665928656379.7%996223819169702249462949640.5%34095382532389224745472.7%8881434519990441229442418380988.8%10321324775021770200134764913.4%6753181644647110877013231387.9%10235285846509012421675618.9%106905252718376385.6%118328327122116150243693.396.3%209.0849.31998.5500.450645098.4%7960238536501925

19991154048.0%14786597835514866555.3%2382110315293822332156081.1%1035324243200072261883503742.1%2951048110922325221396574.5%10351534331693234227069319493189.8%10373332625883672510134900012.2%5655156233973110311414368690.9%10757279167795413919710327.3%1602280105319429087.0%153268445128807164143917.496.3%231.5839.72187.4515.547548098.5%7040213032101700

2000143086212458.3%31671233910769994837330781.3%1429925896233332298763807847.9%3281222140492656277773376.2%159418426418121436331549024920389.7%12098425498260286282157268911.1%6300158774484610777317262890.9%13784303801002751243323782686.3%164889017160402193824616.396.2%287.9896.82696.6559.951654098.6%7390212034001870

2001

ADB, Key Indicators of Developing Asian and Pacific Countries, 2001/1993;

IMF, International Financial Statistics Yearbook 1990.

For Japan, Japan Statistical Yearbook 2002/1999, Statistics Bureau/Statistical Research and Training Institute,

Mill PesosRATEBillion YuanRATEChemMaterialsMachineMisc.Billion WonRATEChemicalsMaterialsMachineryMisc. MfgBillion T$RATEChemMaterialsMachineMisc.RATEChemMaterialsMachineMisc.

196012582.0156.32.4618263.13

196113542.024.782.46185124.79

196218983.72794.712.46187130

196325523.910452.461811130

196416043.915.542.461825213.85

196527283.90926.312.461847266.4

196632203.96.62.461868271.34

196731993.95.882.461887270.52

196833453.95.762.4618126276.65

196933323.95.982.4618179288.16

197061835.90445.682.4618259310.56

197170646.43176.852.4618371347.15

197273516.67488.292.2451638392.89

1973127356.756311.691.98941285398.32

1974185056.787913.941.96121804404.47

1975166077.247914.31.8598----2459484201.5383.947.739.373

197613.481.9414----309.9386.572.865.1119.2

197713.971.8578----355.1388.279.280134.3

197816.761.6836----468.437.0548.9109.8109.4173.5

197921.171.5550----579.336.04812.2147.9136.6209.1

198027.111.49841.685.991.264.25712.236.01518163.5176270.6

198136.761.70452.247.861.826.22829.936.84920.3189.3212.4316.3

198241.381.89252.227.982.346.87864.339.12423.1187.8218.9339.7

43.831.97572.478.612.417.51005.540.06525219.7263.8395.2

25.1

Summary

Manufactured exports (% of total exports)

(Value-copied from data table)

JapanTaiwanKoreaSingaporeMalaysiaThailandPhilippinesIndonesiaChinaVietnamMyanmar

197595.4%81.3%81.6%41.8%30.4%19.6%16.3%2.4%4.5%

197696.1%85.1%87.7%44.7%26.5%21.8%17.9%2.1%2.9%

197796.5%85.0%84.9%43.0%26.5%23.5%18.3%3.5%5.0%

197896.6%85.7%88.5%46.0%30.7%29.9%22.2%4.2%25.8%

197996.2%87.3%89.2%46.2%27.2%31.8%23.6%5.3%5.3%

198096.0%88.2%90.2%44.7%27.8%34.9%24.1%3.9%48.6%7.5%

198196.6%89.0%90.4%45.0%27.7%31.1%25.3%4.4%48.4%5.4%

198296.7%89.0%91.6%44.8%28.3%31.0%24.2%5.4%45.9%4.5%

198396.8%89.9%91.4%50.7%30.2%34.7%26.4%8.6%47.9%7.4%

198497.0%91.0%91.6%51.3%29.8%35.9%26.4%10.6%48.2%7.2%

198597.2%90.7%91.7%52.3%31.5%41.0%31.6%13.7%37.0%5.4%

198697.6%91.3%92.2%60.0%38.8%44.9%34.2%20.2%44.2%29.2%9.5%

198797.6%92.2%92.6%66.6%41.5%52.2%35.4%25.1%47.7%28.5%14.2%

198897.4%92.7%93.4%71.8%45.6%54.9%36.4%30.7%51.4%28.9%7.8%

198997.2%93.3%93.5%73.2%51.0%57.0%40.4%38.9%54.7%28.7%6.1%

199097.0%93.5%93.8%72.3%55.2%63.4%40.9%37.9%55.7%29.2%7.8%

199197.0%93.4%93.1%73.5%61.6%65.4%41.4%43.1%58.5%17.5%4.6%

199297.0%93.8%93.1%77.8%65.5%66.7%43.6%49.6%80.0%16.0%11.0%

199396.8%94.0%93.4%79.4%70.6%71.5%43.6%53.6%81.8%21.5%11.1%

199498.3%93.9%93.6%83.3%74.6%72.3%45.0%52.6%83.8%28.2%11.8%

199598.3%94.0%92.4%86.1%75.7%73.1%43.4%52.1%85.6%32.8%14.3%

199698.3%94.2%89.4%84.7%76.7%71.4%43.6%52.6%85.5%37.3%15.9%

199798.3%95.6%88.1%85.3%77.4%71.5%45.4%43.3%86.9%47.9%15.9%

199898.4%96.3%87.9%85.6%79.7%72.7%40.5%45.4%88.8%46.5%18.9%

199998.5%96.3%90.9%87.0%81.1%74.5%42.1%55.3%89.8%48.0%27.3%

200098.6%96.2%90.9%86.3%81.3%76.2%47.9%58.3%89.7%

Graph

0.95360341910.81339950370.81617791770.41832575640.30386740330.19590285960.1625980820.0237961138197519750.0453857791

0.96062362470.85059696680.87738172390.44740886460.26513911620.21821800420.17909867910.0212940213197619760.0294840295

0.96534965930.84961982540.8492087190.42993678130.26452302960.23489423860.18279911140.0354740625197719770.05

0.96604682820.85738684880.88506018410.45984512310.30684081060.29922349970.22248175180.0419994847197819780.2584704743

0.96164110230.87312273430.89167109460.46234647710.27186029230.31776037860.23581830040.0533675433197919790.0533230294

0.96021127830.88191519240.90208511850.44680594420.2782550050.34906942350.2410158950.03874577260.485996415219800.0750091475

0.96616733370.88962525610.90411216710.449853240.27658711130.31061888480.25270884310.04434730780.483592362919810.0541558065

0.96689398190.89031586250.91552647230.44833944190.28287320340.31013347690.24198366860.05369939090.459489931919820.0451251647

0.96815361560.89875683740.91372468810.50700899140.30160812910.34673521220.26393606390.08583183580.478763610219830.0736842105

0.97049420150.9104341330.91564369980.5134787690.29759101610.35889110180.2643294380.10645102340.482344389619840.0723004695

0.97173778150.90703188880.91655384210.52332649120.3149380540.41013932130.31648304170.13713886050.369616087819850.0535041447

0.97646822010.91327140010.92167650870.60049810150.38794982870.44900442620.34200743490.2016210740.44150345810.29150823830.0950676213

0.97572955730.92187866010.92582644190.66563236320.41494748480.52216919620.3540209790.25134220350.47719146990.28454332550.1417510423

0.9735641530.92724333060.93439435880.71822701230.456116540.54878211960.3635849590.30735209950.51399528580.2890173410.0779753762

0.97185387020.93260098410.93537682160.73210432070.5095761150.57044633610.40352896050.38851031180.54678518410.28674203490.0614682122

0.96981085390.9348790770.93803063860.7232107220.55218090050.63350078750.40923527970.37931840310.5569245140.29159733780.077987846

0.97042338380.93433947470.93081953530.73543384370.61603013850.65421220180.4138009050.43137053050.58520663110.17537134640.0460436562

0.96976854970.93764648440.93141246480.77771864810.65474594090.66690959980.43566775240.49551034830.79981163170.16001549790.1097127223

0.96800901940.93979455110.9337881220.7937190830.70571932890.71490241080.43551648350.53591505310.81834234390.21541038530.1109271523

0.9829767690.93945439740.93590451290.83255615060.74582415650.72251670180.45012237630.52625271520.83777663920.28219042920.1184088807

0.98313785640.93968673720.92389131440.8606512850.75732889340.73148186990.43405743110.5210709410.85555182150.32758304280.1433386201

0.9834053560.94210791410.89371314030.84711128260.76736065290.71380507620.43610962370.52612666870.85476802080.37348401320.1588921283

0.98328556280.95599850650.88059252080.8526988950.77440807640.71514181390.45449500550.43305141830.86893846560.47925966250.158833566

0.98428275250.96314948690.87920310170.85598841990.79713361460.72653277890.40463113640.45404110710.88795978430.46485042740.1893132031

0.98519390930.96341961510.90855058950.86979257810.8112203010.74520870930.42126894430.55335456690.89765609370.48015597920.2725608898

0.98569326670.96206918960.90872859560.86318989510.81274393460.7616603180.47941068330.58307578390.896983583720002000

Source: ADB, Key Indicators of Developing Asian and Pacific Countries, 2001/1993; IMF, International Financial Statistics Yearbook 1990. For Japan, Japan Statistical Yearbook 2002/1999, Statistics Bureau/Statistical Research and Training Institute, Ministry of Public Management, Home Affairs, Posts and Telecommunications, Japan.

Japan

Taiwan

Korea

Singapore

Malaysia

Thailand

Philippines

Indonesia

China

Vietnam

Myanmar

Manufactured Exports(% of total exports)

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Stage 1

Stage 2

Stage 3

Stage 4 Primary Products

Labor Intensive Manufactures

Hi Tech Manufactures

Services (high level)Abundant cheap land and labor

Low Cost Labor

Capital Intensive, Technically Sophisticated ProductsDomestic and International ServicesThe Development Ladder--Stages

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Stage 1Stage 2Stage3Stage 4The Stages of the Product Cycle Process

1950-65 1965-1980 1980-1995 1995-2010China, KoreaTaiwanPhilippinesMalaysiaIndonesiaThailandSingaporeJapanHong KongThailandMalaysiaChinaJapan* SingaporeHong KongTaiwanSingaporeHong KongKoreaJapanTaiwanSingaporeHong KongKoreaJapanIndonesiaPhilippinesVietnamThailandChinaMalaysiaTaiwanKoreaJapan

LaosCambodiaMyanmarIndonesiaPhilippinesVietnamThailandMalaysiaChinaIndonesiaPhilippines

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Fundamentalists and AssimilationsEconomists attempting to understand the sources of East Asias growth tend to fall in 2 camps: Fundamentalists and Assimilationists.Fundamentalists (e.g. Paul Krugman): Growth was mainly input driven. The efficient allocation of resources played a big part in the success story. Input driven growth is not sustainable because there are limits to efficient resource allocation and because incremental growth in inputs is subject to diminishing returns. What model can we use to explain this? Assimilationists (e.g. Paul Romer): Growth was mainly driven by the acquisition and mastery of technology and the capacity to put ideas into practice. What model can we use to explain this?

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Paul Krugmans Classic Article on AsiaSummary: Pundits point to the awesome growth of EastAsia's economies and fret that the West cannot compete. But there is nothing miraculous about the successes of Asia's "tigers." Their rise was fueled by mobilizing resources - increasing inputs of machinery, infrastructure, and education - just like that of the now-derided Soviet economy. Indeed, Singapore's boom is the virtual economic twin of Stalin's U.S.S.R. The growth rates of the newly industrialized countries of East Asia will also slow down. The lesson here for Western policymakers is that sustained growth requires efficiency gains, which come from making painful choices.

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We Cannot Forget the Importance of Demographic TransitionDemography: Changes in birth and death rates and life expectance changes in population growth rate: low to high to low (even falling) demographic transition

What are the Implications?

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Transition: Some Asian CountriesSource: Todaro

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The East Asian Miracle ~ Explanation According to the World Bank FundamentalMacroeconomic stabilityHigh investments in human capitalStable and secure financial systemsLimited price distortionsAgricultural development Openness to foreign technology

SelectiveMild financial repressionDirected creditSelective industrial promotionExport-push trade policiesgetting the fundamentals right, with highly selective interventions

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Causes of the Miracle:Public Policy (World Bank Report)Rapid Accumulation (of human & physical capital)Developing human capitalPrimary and secondary education was emphasizedTertiary education funds mostly for hard sciencesFemale literacy more workers, lower fertility ratesCreating effective and secure financial systemsIncreased savings: (including forced savings)promoted by the integrity and accessibility of postal banksIncreased investment:investment-friendly environment; creating infrastructureeasy credit through financial repression

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Efficient Allocation of capital Letting markets work: flexible labour marketsgovernments less responsive to organized labourProductivity-driven wage rises, even downwardNo minimum wageemphasis on creating jobs; high employment levelsAssisting the market: credit for priority areasIndustrial policies: targeting winnerscriteria: growth, productivity, spilloverCredit directed against strict performance criteriacontests, thru deliberative councilsMost subsidy small, but a signal to capital markets.Causes of the Miracle:Public Policy (World Bank Report)

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Technology catch-up and high productivity actively seeking foreign technologyindustrial policy promoted high-tech sectorsencouraging exportsother special features of East Asian growththe principle of shared growthmacroeconomic stabilitycooperative competition (led by technocratic elite)business-friendly environment, led by private investmentstate interventions addressed market failures allocated by contestsCauses of the Miracle:Public Policy (World Bank Report)

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World Bank (1993), East Asian Miracle, Economic Growth and Public Policy, Washington D.C.

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The Role of PolicyMacro Policies For Stability Basic Government Services Infrastructure investment Education and technologyEnvironmental PoliciesLegal Structure and Property RightsSupervision of Banking System Selective Industrial Policies

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Investment and Technology: Role of Foreign CapitalForeign direct investment (FDI)International capital market and investment capital Global sources of technical progress: technology transfer

What is the role of each?

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Capital should include human capital, not only tangible objects Also, there is evidence that social capital contributes to growth

What is meant by social capital?

http://www.nber.org/papers/w5470

Human Capital and Social Capital

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The Role of TFP

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The Role of GovernmentEast Asian countries adopted sound fundamental policies.Control inflationManage internal and external debtsResolve macroeconomic crises quicklyInvest in educationMaintain stable and secure financial systemsLimit price distortionsOpen up to foreign trade and investmentPromote exports

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The Role of OpennessAn outward-oriented policy has long been seen as a centrepiece of East Asias economic success.Integration into the world economy provides firms to access to a large variety of goods and services which embody new technologies. It enables a country to adopt or adjust foreign technologies for domestic uses. By doing so, a country's productivity in imitation and innovation will be enhanced. Exposure to international competition may bring about higher-quality products and alleviate duplication of R&D efforts. More open economies can take advantage of larger markets, increasing their degree of efficiency (economies of scale) and their rates of growth.

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Was East Asian Growth Miraculous?YesGrowth was very rapid (more than 7% p.a.)A large productivity factor (4-5% p.a.)Obvious shifts to advanced technologyNoKrugman--input based growth and diminishing returnsNot if we take into account the contribution of knowledge and the interaction between investment and technology

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Was Government Policy Responsible for the East Asian Miracle?No -- Neoclassical - Free Market Just get prices right Growth would have been even faster if reforms had enabled intervention to be reduced.Yes -- Revisionist, - State-Led The Developmental State the existence of a state apparatus..that used its power to pursue the goals of military strength and national economic wealth.

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Was Government Policy Responsible for the East Asian Miracle?World Bank Fundamentally sound development policy was a major ingredient in achieving rapid growth:..Macro management, saving promotion policies, education, agricultural productivity, .. But these do not tell the whole story. Government intervened..targeting selected industries, promoting exports, low interest rates, protecting certain industries,.. ..rapid growth has at times benefited from careful policy intervention ..the promotion of specific industries generally did not work. The fact that interventions were an element of some East Asian economies success does not mean that they should be attempted everywhere.

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Joseph Stiglitz on East Asia: Governments in East Asia recognised limitations of markets but confined the governments role to:Ensure macroeconomic stabilityMake markets more effective, for example, by regulating financial marketsCreating markets where they did not existHelping to direct investment to enhance growth and stabilityCreate atmosphere conducive to private investment and ensure political stabilityhttp://www2.gsb.columbia.edu/faculty/jstiglitz/download/opeds/What_I_Learned_at_the_World_Economic_Crisis.htm

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