Alternative Explanations of the Trade-Output Correlation in the East Asian Economies

A number of Asian countries have been able to follow the example of Japan and develop sophisticated industrial economies in a relatively short time. Specifically, Hong Kong, South Korea, Singapore and Taiwan have become known as the "Four Tigers" of Asia due to their strength and importance in international markets. It is not only the pace of industrialisation but the relative equity which has accompanied growth in these countries that has fascinated economists. This paper analyses alternative structural models which represent different theoretical frameworks for development in East Asia. A structural vectorautoregressive technique is used with panel data comprising Hong Kong, Japan, South Korea, Singapore and Taiwan, for the period 1969-89. This technique has been chosen because it can discriminate between structural hypotheses. The first model tested is a model of export-led output growth. In this exercise exports are allowed to have a direct stimulating effect on the economy. In ...