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State Development Planning: Did it Create an East Asian Miracle?

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  • Benjamin Powell

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Abstract

East Asian countries have recorded large increases in per capita GDP over the last fifty years. Some observers have referred to this growth as an “East Asian Miracle.” One popular explanation attributes the rapid growth to state led industrial development planning. This paper critically assesses the arguments surrounding state development planning and East Asia’s growth. Whether the state can acquire the knowledge necessary to calculate which industries it should promote and how state development planning can deal with political incentive problems faced by planners are both examined. When we look at the development record of East Asian countries we find that to the extent development planning did exist, it could not calculate which industries would promote development, so it instead promoted industrialization. We also find that what rapid growth in living standards did occur can be better explained by free markets than state planning because, as measured in economic freedom indexes, these countries were some of the most free market in the world. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Benjamin Powell, 2005. "State Development Planning: Did it Create an East Asian Miracle?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 18(3), pages 305-323, December.
  • Handle: RePEc:kap:revaec:v:18:y:2005:i:3:p:305-323
    DOI: 10.1007/s11138-005-4015-x
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    References listed on IDEAS

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    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
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    7. Wade, Robert, 1998. "From 'Miracle' to 'Cronysim': Explaining the Great Asian Slump," Cambridge Journal of Economics, Oxford University Press, vol. 22(6), pages 693-706, November.
    8. Stiglitz, Joseph E., 1999. "Lessons From East Asia," Journal of Policy Modeling, Elsevier, vol. 21(3), pages 311-330, May.
    9. Seth W. Norton, 1998. "Poverty, Property Rights, and Human Well-Being: A Cross-National Study," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 233-245, Fall.
    10. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
    11. Herbert G. Grubel, 1998. "Economic Freedom and Human Welfare: Some Empirical Findings," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 287-304, Fall.
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    Cited by:

    1. Anthony J. Evans & Vlad Tarko, 2014. "Contemporary Work in Austrian Economics," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 29(Fall 2014), pages 135-157.
    2. G. Manish & Benjamin Powell, 2014. "Capital Theory and the Process of Inter-Temporal Coordination: The Austrian Contribution to the Theory of Economic Growth," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(2), pages 133-142, June.

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