The East Asian miracle : four lessons for development policy

Since the study of economic development began in earnest at the close of the Second World War, academics and policymakers have debated the appropriate role of public policy in developing economies. 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, and 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 in some of the East Asian economies-especially Japan, Korea, Singapore, and Taiwan-has raised complex and controversial questions concerning the relationship between government, the private sector, and the market.This essay looks at four public policy lessons of the East Asian miracle. Section 1 argues that the eight HPAEs can be grouped together and distinguished from other low- and middle-income countries on the basis of their rapid, sustained, and shared growth. Section 2 examines the controversy over the sources of growth in the HP AEs and presents evidence on the relative roles of accumulation and total factor productivity (TFP) change. Section 3 discusses two aspects of public policy in East Asia that conform to the conventional wisdom concerning good development policy-macroeconomic management and broad-based educational policies. Section 4 examines two more controversial issues -the significance of the HPAEs' export push strategies and industrial policies for TFP change. It concludes that export orientation rather than selective intervention played the dominant role in increasing economywide TFP growth rates.