RAPID DEVELOPMENT OF EAST ASIAN 'TIGER ECONOMIES'

RAPID DEVELOPMENT OF EAST ASIAN 'TIGER ECONOMIES'

RAPID DEVELOPMENT OF EAST ASIAN 'TIGER ECONOMIES'

East Asian Economy

Over the past 50 years, the economies of East Asia have attracted intense attention because of their rapid growth, which transformed them from relatively poor countries lacking modern technology to economic powerhouses with dynamic export-oriented industries and living standards similar to those in the richest countries of the Western world. Because of their rapid development, they have been referred to as “Asian miracles,” which is justifiable, especially if their transition is compared to the experiences of other countries.

Initially, many East Asian economies were not very different from underdeveloped African countries in terms of gross domestic product (GDP) per capita, but their phenomenal growth enabled them to surpass the relatively wealthy South American economies and get close to the living standards in Western Europe and North America. Moreover, in only a few decades, East Asian economies experienced a development that took the United States and Western Europe more than 100 years. Not surprisingly, economists have been analyzing the growth and development in East Asia and looking to identify the factors that might have contributed to this process. This is a very important and worthy exercise for two reasons. First, based on the analysis of the determinants of growth, it is possible to forecast whether current growth patterns of East Asian economies are sustainable in the long run. If the accumulation of physical capital through savings was responsible for their phenomenal growth, then their growth rates will probably slow down in the future. However, if their growth relied on technological innovation, it is likely that they will be able to sustain their rapid growth over the next few decades.

Second, a detailed analysis of the East Asian growth experience can provide valuable lessons for other developing countries in terms of policy measures that stimulate growth. Despite several reform proposals, the imperial government in China remained weak, indecisive, inefficient, and corrupt. It lacked a national policy of economic development and did not have the necessary capital to fund the industrialization of the country.

In contrast, Japan strengthened the imperial powers and implemented a number of economic and political reforms that were vital for the development of the country in the twentieth century. Land and tax reform ensured a steady stream of revenue for the government, which it used to finance industrialization efforts. Modern factories were built, and foreign advisers were hired. Commercial banks were set up, and a central bank was created to oversee the monetary system. An efficient government administration was formed, and a constitution introduced elections and a parliament. Education became compulsory, and a modern army trained by foreigner military advisers was created. By the end of the nineteenth century, Japan had become a rapid-growing regional power that was starting to expand abroad.

Soon it defeated China and Russia in regional wars and occupied Korea and Taiwan. Despite the destruction of its economy during World War II, Japan was able to ...