Development in the Asian Region

Key Issues & Concepts Pertinent to Economic Growth & Development in the Asian Region
By Aaron Schwartz

In 1993 the World Bank analyzed the causes of East Asia’s development and success in The East Asian Miracle—Economic Growth and Public Policy. It states: What caused East Asia’s success? In large measure the HPAES achieved high growth by getting the basics right, private domestic investment and rapidly growing human capital were the principal engines of economic growth. Agriculture experienced rapid growth and productivity improvement. Population growth rates declined more rapidly in the HPAES than in other parts of the developing world. And some of these economies got a head start because they had a better educated labour force and a more effective system of public administration. In this sense there is little that is "miraculous" about the HPAES’ superior growth record;it is due to superior accumulation of physical and human capital (World Bank, 1993). East Asia’s economic success can be used by other developing countries in the current international environment. It can be explained by successful interventionist government policies, by their openness that is conducive to growth and development. (Glick and Moreno 1997)

For a long time East Asia was not distinguished by anything very special on the economic map of the world. But in 1960th the situation in East Asia start changing, and in the 1980th successes of "new industrial countries" of East Asia became the theme of scientific discussions and enthusiastic journalistic essays.

Swift economic growth in the countries of "Tigers" (Taiwan, Hong Kong, Singapore, Korea) began in 1960-1965. Changes came to their neighbor countries two decades later. Those were the countries of the "second wave" of development (Malaysia, Thailand, Indonesia). The leaders of "Tigers" chose the strategy according to geography, history, foreign policy and usual good sense. All countries of "Tigers" lacked supplies of minerals, but there were great "supplies" of cheap and disciplined labour force in their disposal. So the best decisions for these countries were the creation of economics oriented to the export, their transformation into "countries-factories", which would import raw material and exported the prepared products created by local workers. There is one more feature united all "tigers": active state interference in the economy. Besides the economic growth was accomplished under the authoritarian regimes. It created ideal base for a corruption.

Changes happened in East Asia in 1960-1990 indeed deserve to be called a "miracle". Average annual growth of GDP in 1960-1990 got around the European level, and sometimes surpassed it. According to Satoshi Ikeda, Taiwan, South Korea, Singapore and Hong Kong are the only Third World countries to have grown rapidly enough to close the relative income gap between themselves and the advanced capitalist economies. (S. Ikeda 1996) The development of the states of the "second wave" occurred under another circumstances. Their traditions were different from those of the "first echelon". They already had the example of "four tigers". Besides, foreign investors were assured the investments to East Asia should be advantageous. The international climate was friendly for realization of the most ambitious plans. The states of the West were ready to give considerable help to the programs of economic development in East Asia. Under those circumstances the realization of the economic programs for the "second echelon"(Thailand, Indonesia, Malaysia) began.