IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/8553.html
   My bibliography  Save this book chapter

Explaining Miracles: Growth Regressions Meet the Gang of Four

In: Growth Theories in Light of the East Asian Experience, NBER-EASE Volume 4

Author

Listed:
  • William Easterly

Abstract

The authorexamines a range of cross-sectional variation in performance and policies for evidence on what distinguishes successes from failures. At about 6 percent, the growth rate of the Four Tigers - Hong Kong, the Republic of Korea, Singapore, and Taiwan (China) - are among the largest outliners in any study of growth. This is not surprising, says the author. The Four Tigers are Tigers because their growth rate was high. The Four generally have large positive residuals in growth regressions, but the author argues that this is not surprising for observations that were known in advance to be at the top of the sample. But growth regressions and, more generally, quantitative measures of"policies"are not very successful at picking out the Gang of Four as"most likely to succeed."Most observers before the"miracle"were pessimistic about East Asia. The Four are not nearly as superlative in policies and other country characteristics as they are in per capita growth rates. Large positive residuals such as those associated with the Four's high performance have historically been transitory. The stratospheric trajectory of the Four should be heading back toward earth soon, says the author. What may be unusual about the Four's success is that they were all in one region. At least casually, the Asian successes look a lot like growth radiating from poles, with Japan followed by the Gang of Four, followed by China, Thailand, Malaysia, and Indonesia. The great success of the Gang of Four does not imply a blanket endorsement of all their policies - they may have made mistakes that were more than offset by other good policies and, probably at least in part, by good luck. It is disturbing how large and transitory the unexplained element is in economic success. Perhaps the best way to think about good policies is that they make success likely sooner or later. When all is said and done, the story of the East Asian successes is consistent with the prosaic fun
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • William Easterly, 1995. "Explaining Miracles: Growth Regressions Meet the Gang of Four," NBER Chapters,in: Growth Theories in Light of the East Asian Experience, NBER-EASE Volume 4, pages 267-299 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8553
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c8553.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    3. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
    4. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
    5. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    6. Lucas, Robert E, Jr, 1993. "Making a Miracle," Econometrica, Econometric Society, vol. 61(2), pages 251-272, March.
    7. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    8. Michael Bruno, 1993. "Inflation and Growth in an Integrated Approach," NBER Working Papers 4422, National Bureau of Economic Research, Inc.
    9. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
    10. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    11. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    12. repec:hoo:wpaper:e-93-6 is not listed on IDEAS
    13. Wontack Hong, 1993. "Export-Oriented Growth and Equity in Korea," NBER Chapters,in: Trade and Protectionism, NBER-EASE Volume 2, pages 413-436 National Bureau of Economic Research, Inc.
    14. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 445-502.
    15. Collins, Susan M, 1990. "Lessons from Korean Economic Growth," American Economic Review, American Economic Association, vol. 80(2), pages 104-107, May.
    16. Greenwood, Michael J., 1981. "Migration and Economic Growth in the United States," Elsevier Monographs, Elsevier, edition 1, number 9780123006509 edited by Mills, Edwin S..
    17. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    18. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    19. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    20. David Lipton & Jeffrey D. Sachs, 1992. "Prospects for Russia's Economic Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 213-284.
    21. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    22. Pack, Howard & Westphal, Larry E., 1986. "Industrial strategy and technological change : Theory versus reality," Journal of Development Economics, Elsevier, vol. 22(1), pages 87-128, June.
    23. Summers, Robert & Heston, Alan, 1988. "A New Set of International Comparisons of Real Product and Price Levels Estimates for 130 Countries, 1950-1985," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 1-25, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James B. Ang & Jakob B. Madsen, 2011. "Can Second-Generation Endogenous Growth Models Explain the Productivity Trends and Knowledge Production in the Asian Miracle Economies?," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1360-1373, November.
    2. Leung, H. M. & Tan, Swee Liang & Yang, Zhen Lin, 2004. "What has luck got to do with economic development? An interpretation of resurgent Asia's growth experience," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 373-385, April.
    3. Lee Kian Lim & Michael McAleer, 2004. "Convergence and catching up in ASEAN: a comparative analysis," Applied Economics, Taylor & Francis Journals, vol. 36(2), pages 137-153.
    4. Feenstra, Robert C. & Madani, Dorsati & Yang, Tzu-Han & Liang, Chi-Yuan, 1999. "Testing endogenous growth in South Korea and Taiwan," Journal of Development Economics, Elsevier, vol. 60(2), pages 317-341, December.
    5. Juncal Cuñado & L.A. Gil-Alana & F. Pérez de Gracia, 2007. "Real convergence in some emerging countries: a fractionally integrated approach," Recherches économiques de Louvain, De Boeck Université, vol. 73(3), pages 293-310.
    6. Chanda, Areendam, 2005. "The influence of capital controls on long run growth: Where and how much?," Journal of Development Economics, Elsevier, vol. 77(2), pages 441-466, August.
    7. Birdsall, Nancy & Rhee, Changyong, 1993. "Does results and development (R&D) contribute to economic growth in developing countries?," Policy Research Working Paper Series 1221, The World Bank.
    8. Lee Kian Lim, 2000. "Convergence and Catching Up in South-East Asia: A Comparative Analysis," Econometric Society World Congress 2000 Contributed Papers 1844, Econometric Society.
    9. Cunado, J. & Gil-Alana, L. A. & Perez de Gracia, F., 2004. "Real convergence in Taiwan: a fractionally integrated approach," Journal of Asian Economics, Elsevier, vol. 15(3), pages 529-547, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:8553. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.