Explaining East Asian Growth
Jennifer Moore
Xiong Ye
There Are At Least Three Models of
East Asian Development
Dwight H. Perkins
World Bank Study of The Success of
High Performing Asian Economies
 1. the emphasis on the export of manufactures
 2. the maintenance of macroeconomic stability
 3. the emphasis on primary and secondary rather than
tertiary education
At Least Three Distinctive Models
 1. Manufactured export-led state interventionist model:
Japan, Korea, and Taiwan
 2. Commerce dominated model: Singapore and Hong Kong
 3. Rich in natural resources but not in human resources:
Indonesia, Malaysia, and Thailand
1. The emphasis on the export of
manufactures
 World Bank
 Perkins
 The concentrated effort to
 Manufacture exports for
promote manufactured
exports was critical.
Malaysia and Indonesia,
because of the exportable
natural resources, are not the
same as other East Asian
economies.
2. The maintenance of macroeconomic
stability
 World Bank
 Perkins
 HPAEs respected fiscal
 It is not that the HPAEs all
prudence and avoided
overvalued exchange rates.
managed to maintain
balanced budgets and limit
their borrowing abroad.
 HPAEs, on average, budget
deficits were as large as other
developing countries.
 Indonesia borrowed heavily
abroad.
3. Emphasis on primary and secondary
rather than tertiary education
 World Bank
 Perkins
 HPAEs emphasized on
 Agreed on, and
human capital development
complemented most parts of
by providing universal
the study.
primary education and
 Quarrel: WB was too casually
expanding secondary
lumping together different
education.
human capital development
challenges that faced to
Muslim dominated counties
versus Confucian value
system dominated countries.
The Role of Government Interventions
 World Bank
 Perkins
 Attempts to both describe
 The diversity is enormous
the diversity and draw
general conclusions
applicable to all or most.
and making a coherent story
out a that diversity is a
formidable task.
The Historical And Political Context
 World Bank
 Perkins
 Explained what the HPAEs
 Should give more attention
did to achieve rapid growth.
to “why” HPAEs were able to
carry out effective policies
The Myth of Asia’s Miracle
Paul Krugman
- Soviet Expansion  Initial success of a centrally planned economy (CPE)
 Alarmed the U.S. and other Western nations
 “The rapid growth in output could be fully explained by rapid
growth in inputs:”
 Employment
 Education
 Investment in physical capital
- Four Tigers  Input-driven growth
 Lack of technical progress
- Singapore  Employment swelled from 27% to 51%
 Nearly a doubling of the employment rate
 More educated labor force
 In 1966 less than half the population had a formal education, but by 1990
two-thirds boasted a formal education
 Heavy investment in physical capital
 As a share of output, investment increased from 11% to over 40%
Contributions of the Sources of Growth
(percentage)
Country
Capital
Labour
Technical Progress
China
92.2
9.2
-1.4
Hong Kong
55.8
16.0
28.2
Indonesia
115.7
11.5
-27.2
Japan
62.9
4.7
32.4
Malaysia
70.9
18.7
10.5
Philippines
99.5
22.6
-17.5
Singapore
60.0
20.9
20.1
South Korea
86.3
12.7
1.0
Taiwan
88.9
8.6
2.5
Thailand
71.9
12.7
15.3
France
37.8
-1.3
63.5
West Germany
43.7
-6.3
62.6
United Kingdom
46.0
3.7
50.3
United States
32.9
26.2
41.0
APCs
IWCs
- China & Japan  Issues with China
 Statistical reliability and biased data
 A threshold comparison timeframe
 Japan as an outlier
 Exhibited heavy input-driven growth
 Marked with expanding efficiency
 Aligns more with western nations
 Has hit a plateau
- Conclusion  Perkins:
 World Bank study is seen as part of an ongoing attempt to
explains East Asians economies, but there is still a great deal of
work needs to be done.
 Krugman:
 Like the Soviet expansions of the 1950’s, the Asian Miracle is
nothing more than a gilded reality of input-driven growth.
Sources:
Kim, J., & Lau, L. J. (1996). The sources of Asian Pacific
economic growth. Canadian Journal of Economics, 29(2), S448.
Krugman, P. (1994). The Myth of Asia’s Miracle. Foreign Affairs,
73(6), 62-78.
Perkins, D. (1994). “There Are at least Three Models of East
Asian Development,” World Development 22(4): 655-661.
World Bank (1993). The East Asian Miracle: Economic Growth
and Public Policy.