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How Asia Works

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How Asia Works

Success and Failure in the World’s Most Dynamic Region

Grove,

15 min read
10 take-aways
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Preconditions and strategies for economic development in East Asia.

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Editorial Rating

9

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  • Innovative

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In the 1980s, economists popularized the term the “East Asian miracle,” thus feeding the belief that Asian countries have had homogeneous economic experiences. They have not, according to journalist and Asia expert Joe Studwell. China, Japan, Taiwan and South Korea implemented their ultimately successful strategies years before any discussion of the “East Asian miracle.” They reformed their agricultural sectors, focused on manufacturing and then subordinated finance activities to these two priorities. Studwell challenges the belief that countries should leave economic development to market forces. He uses economic history to show that almost every advanced economy used protectionism at some stage to boost growth. He cites East Asia’s remarkable record to show why poor countries must remain steadfast in pursuing their goals, unswayed by trendy economic advice or pressure from their own entrepreneurs. getAbstract recommends Studwell’s comprehensive, rigorous and thought-provoking analysis to policy makers, historians, investors and economists intrigued by “the world’s most dynamic region.”

Summary

The Economic Development Debate

East Asia’s rapid success has made it the centerpiece of economists’ debate about how poor countries can grow. In the past, the formula for East Asian economic development was as “simple as one, two, three: household farming, export-oriented manufacturing” and a controlled finance sector that supports them both. To stick with this path, policy makers have had to challenge common economic wisdom.

Neoclassical economists argue that state intervention – including protectionism – retards progress. But almost every advanced economy – including Great Britain, France, Germany and Japan – at some stage adopted protectionism to help their economies. The ideas of the first US treasury secretary, Alexander Hamilton, shaped the US government’s policy of selectively imposing tariffs in the 19th and the 20th centuries. The US has been “the mother country and bastion of modern protectionism,” but Frederick the Great of Prussia also followed protectionist industrial policies, as did unified Germany. After the Meiji restoration, Japan emulated the Prussian model. Korea and Taiwan followed Japan’s lead.

Economic thought about how to build prosperity...

About the Author

Journalist Joe Studwell has published several books on Asia.

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