Week 7 - East Asian Miracle

Question 1

What was the East Asian miracle?

Answer 1

• Strong economic growth from East Asian countries
• Japan had unprecedented growth
• Followed by South Korea, Singapore and Taiwan

Question 2

What was Japan’s experience of industrialisation?

Answer 2

• It was the First Non Western Country that managed to catch up with the West after the Meji restoration. (1868)
• Ito (1996) argues that it learnt from western models of development.
• Originally Japan benefitted from early export
• During WW1 as Western forces were distracted they were able to make the most of this
• However, by WW2 as world had become protectionist Japan had to look to colonial markets
• After WW2 Japan was heavily bombed by the allies so it lost its productive potential
• Japan was occupied by US 1945-1952
• Economic reforms to break up the Zaibatsu and its monopolistic power
• 1950 the Japanese miracle happened with 10% growth a year
• Slowed after the 1973 Oil shock to about 4% a year

Question 3

What was the role of the government in Japan’s industrialisation

Answer 3

MITI

Question 4

How were South Korea and Taiwan before the growth?

Answer 4

See coggle

Question 5

How did South Korea and Taiwan start growing?

What were the exact growth rates over the period?

Answer 5

• In 1950s South Korea and Taiwan focused on import substitution to protect domestic economies
• They relied heavily on US aid.
• In the late 1950s US aid started to shrink so they had to start pushing firms to export
• There was a devaluation to the currency but Rodrik (1995) argues it was more the investment boom that caused this change in exports
• South Korea avg growth, 6% and Taiwan 6% from 1960-1989

Question 6

What was the idea of Rodrik (1995) on South Korea and Taiwan?

Answer 6

Goes against the status quo that it was the exports to cause growth
Rather it was the investment that made exports neccessary

Question 8

What did Perkins and Tang (2015) say?

Answer 8

• Use a historical case study
• Explain how while differently Japan, South Korea and Taiwan all industrialised differently.

Japan used big family firms (Zaibatsu)

Korea used big state-backed companies (Chaebol)

Taiwan used lots of smaller private firms

Question 9

What are the required papers on the East Asian Miracle?

Answer 9

-Rodrik (2015)
- Young (1995)
- Collins et al (1996)

Question 10

What does Young (1995) say

Answer 10

• Uses growth accounting of production function to explain growth
• Uses data for land and labour and then works backward to calculate TFP

Question 11

What does World Bank (1993) say and how does it differ

Answer 11

• Like Young (1995) finds that factor accumulation was more meaningful, but explains that it could be due to better policy in translating it into growth

Question 12

What did Westphal (1990) say?

Answer 12

Asked how South Korea went from a poor economy to such a successful exporter

Results:
Exports rose from 4% of GNP in 1960 to 40% of GNP in 1980

Korea’s industrial policy succeeded because it was targeted, temporary, export-focused, and backed by performance pressure — showing that state-led development can work when disciplined by results.

Question 13

What does Hanushek and Woesmenn (2016)

Answer 13

PISA test scores show that the Quality of education in East ASia was better

Question 14

What does Aw et al (2003) say?

Answer 14

Looks at firm level data on entry and exits

Taiwan had 13% exit while South Korea had 7%, suggests there was better productivity sorting in.

So on a micro level Taiwan was more dynamic while SOuth Korea had a few large firms