Lessons of the asian miracle

Topics: Economic growth, Economic development, Asia Pages: 6 (1562 words) Published: November 19, 2013

Asian Economics

The East Asia Miracle:
Lessons for the Developing Countries

Words: 1546


2.Critical Factors of the East Asian Miracle and it’s lessons3
2.1 Promotion of the Agricultural Sector
2.2 Promotion of Education
2.3 Structural and Technological Upgrading
2.4 The Role of the Policy System
3.Case study: Lessons for the Philippines7

1. Introduction

East Asia has a remarkable record of high and sustained economic growth. From 1965 to 1990 its 23 economies grew faster than those of all other regions. Most of this achievement is attributable to seemingly miraculous growth in just eight high performing Asian economies (HPAEs) – Japan, the “four tigers”: Hong Kong, the Republic of Korea, Singapore, Taiwan and the three newly industrializing economies (NIEs) of Southeast Asia, Indonesia, Malaysia and Thailand. The East Asian economies provide a range of policy frameworks – extending from Hong Kong’s nearly complete laissez faire to the highly selective policy regimes of Japan and Korea. The coexistence of activist public policies and rapid growth has raised complex and controversial questions concerning the relationship between government, the private sector, and the market.1

The rapid economic growth of eight East Asian economies, often called the “East Asian miracle, ” raises two questions: What policies and other factors contributed to that growth? And can other developing countries replicate those policies to stimulate equally rapid growth? This study seeks to explore whether lessons learned from the experiences of East Asia can be applied to chart a similar path of success for other developing countries.

2. Critical Factors of the East Asian Miracle and it’s lessons The East Asia region has been drawing global attention as fruits of its growth and development over the past thirty years continuously awe many. The most successful developing countries over the last half century apparently have come from this region. It has a remarkable record of high and sustained economic growth as 23 economies in it grew faster than those in other parts of the world. Although East Asian economies applied varying strategies in their economic development, a salient and strong factor common to all is the presence and the role of the government in their development. East Asian countries have assumed a role of a ‘developmental’ state in which the government played an important hands-on role in the process of industrialization and economic development.2 According to Thorbecke and Wan (2004) there are two critical factors and corresponding phases of development that occurred in East Asia. First, countries need to reach first a take-off point which emphasizes on promotion of education, to build up on human capital and the promotion of the agricultural sector in order to eventually finance investments on physical infrastructure. The second phase, development calls for industrialization that brings structural and technological upgrading. 2.1 Promotion of the Agricultural Sector

First lesson implied in the first phase of development is that economic development cannot be hurried. There are certain processes that need to be readied before countries reach the take-off point. At the beginning of the development process a country is predominantly agrarian and the economy is relatively closed.3 East Asian governments understood that the major mechanism for obtaining the resources needed to “escape the poverty trap and for industrialization was through and inter-sectoral transfer out of agriculture” (Thorbecke, Wan, 2004, p.3). The major role of the agricultural sector was to generate the necessary capital to finance the outset of the industrialization process. The main lesson to be drawn from the experience was summarized by Thorbecke and Morrison cited in the Revisiting East Asia’s development model: “A lesson learned from those...
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