Factor Accumulation without Diminishing Returns: the Case of East Asia

We investigate the similarity of the country endowments of the newly industrialized East Asian countries (NICs) and their major developed trading partners since the 1960s. In particular, we analyze their factor endowments in the years 1965, 1977, and 1990, using the lens condition of <link rid="b1">Deardorff (1994</link>). Because of the similarity of endowments of the NICs and their developed-country trading partners, we cannot reject the hypothesis that these countries are diversified economies, able to produce the same set of goods since the 1960s. This empirical evidence supports the theoretical analyses of the East Asian growth miracle of <link rid="b7">Mankiw (1995</link>) and <link rid="b12">Ventura (1997</link>) in an environment in which factor accumulation did not imply decreasing returns to capital. Copyright © 2006 The Authors; Journal compilation © Blackwell Publishing Ltd. 2006.