(S.P. Seth, Courtesy The Tribune) Some Americans are peeved over the acclaim heaped on “tiger” economies of East Asia (Singapore, Taiwan, Hong Kong and South Korea) for their impressive growth rates over the past 25 years. The four “tiger” economies have reportedly grown by between 6 and 8 per cent annually over this period more than twice the OECD average of 3.1 per cent. It is not just the high growth rate but also the consistency of this growth which is remarkable. Even more importantly, these economics have continued to grow at a rate of 5 per cent or more annually during the 1991-93 global recession (which only now seems to be abating) compared to an average growth. rate of 1.25 per cent of the world’s biggest economics-the USA, Japan, etc.
The question is: how did the “tigers” accomplish this? Mr Lee Kuan Yew, Singapore’s supreme leader and the high priest of the East Asian model of development, has no doubt that this was possible because of East Asia’s Confucian heritage. In an interview with a prestigious American journal, Foreign Affairs, he put it thus: “… we were fortunate that we had this cultural backdrop, the belief in thrift, hard work, filial piety and loyalty in the extended family, and master All, the respect for scholarship and learn ing
Decrying the breakdown of civil socially” in the West (especially America) because of the over-cmpba sis on individual rights – the night of the individual to behave or mishe have as to pleases he commended the example of Eastern (Asian) societies which “believe that the individual exists in the context of his family.”
But such moralizing has come to be resented by some American scholars (the same way American and European moralizing on human rights is resented by many Asian governments). As Fareed Zakaria, Forciun Affairs Managing Editor who interviewed Mr Lee Kuan Yew has pointed out.” If Confucianism explains the economic boom in East Asia today Does it also not explain that the region’s stagnation for four centuries?” indeed, early Chinese revolutionaries both nationalists and communists including Mao) had sought to jouison Confucianism as a barrier to China’s modernization. Therefore, cultural determinant as an explanation for economic dynamism takes us neither here nor there
Some American scholars simply dismiss “The Myth of Asia’s Miracle the title of a recent article in Foreign Allans by Prof Paul Krugman of Stanford University in the USA His basic thesis is that like the much trumpeted miracle of Soviet economic growth in the fifties and the sixties, East Asian growth is similarly “based on expansion of inputs (such as capital and labor), rather than on growth in output per unit of input gains in efficiency)
Elaborating, he says, “The newly industrializing countries of Asia, like the Suvic Union of the 1950s, have achieved rapid growth in large parts through an astonishing mobilization of resources. Once on accounts for the role of rapidly growing inputs in these countries’ growth, one finds little Ieft to explain.”
To take Singapore’s case, for instance. Between 1966 and 1990, Singapore’s economy is bid to have grown at a rate of 8.5 per cent per annum, three times as fast as the USA And how did it happen? Simply “through a mobilization of resources that would have done Stalin proud” During this period the share of people in employment rose from 27 to 51 per cent, and educational standards of the work force wore significantly upgraded. More importantly, perhaps, there was a surge in capital investment from 11 to more than 40 per cent as a share of output Which is an important achievement But the argument is that such mobilization of resources cannot be repeated over and over again. Therefore, Singapore and other tiger economies cannot be expected to sustain the high growth rates of the past Another recent study on the subject The Role of Human Capital in the Economic Growth of the East Asian Newly Industrialized Countries (NIC) by Laurence Lau and Joog! Kim for Stanford University) hang also come to a similar conclusion,
But in this respect the NICs are to different from major Western economics (including the USA) in their early phases of industrialization. Like the “tiger” economics, Western countries and Japan) to initially decided overwhelmingly on capital acumination/investing and labor mobilization for their rapid economic growth. Only much later, the rate of Capital formation slowed down with more focus on technology driven growth from R&D (research and development). And there is no reason why Asian economies will not be able to do the same once they have optionally used capital and labor.
Article extracted from this publication >> February 17, 1995
