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Lessons from the East Asian NICs: A Contrarian View

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  • Alwyn Young

Abstract

The unusually rapid and prolonged growth of both output and exports in the Newly Industralizing Countries of East Asia has led many economists to believe that productivity growth in these economies, particularly in their manufacturing sectors, has been extraordinarily high. This view has, in turn, led to a growing belief in the 'dynamic' (i.e. total factor productivity) gains from an outward orientation. This view fails to take into account the equally unusual rapid growth of both capital and labour input in these economies. Using the Summers & Heston and OECD data sets, this paper uses simple back of the envelope calculations to show that, as regards productivity growth in the aggregate economy and in manufacturing in particular, the East Asian NICs are not, in general, substantial outliers. The principal lessons to be drawn from the NICs are likely to be those concerning the potential gains from factor accumulation and the sectoral reallocation of resources, i.e. 'static' neoclassical gains which have fueled the dynamic growth of these economies for more than 20 years.

Suggested Citation

  • Alwyn Young, 1993. "Lessons from the East Asian NICs: A Contrarian View," NBER Working Papers 4482, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4482
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    Cited by:

    1. Kalpana Kochhar & Prakash Loungani & Mark R. Stone, 1998. "The East Asian Crisis; Macroeconomic Developments and Policy Lessons," IMF Working Papers 98/128, International Monetary Fund.
    2. Rodrik, Dani, 1997. "The 'paradoxes' of the successful state," European Economic Review, Elsevier, vol. 41(3-5), pages 411-442, April.
    3. J. David Richardson & Pamela J. Smith, 1995. "Sectoral Growth Across U.S. States: Factor Content, Linkages, and Trade," NBER Working Papers 5094, National Bureau of Economic Research, Inc.
    4. Alan M. Taylor, 1996. "On the Costs of Inward-Looking Development: Historical Perspectives on Price Distortions, Growth, and Divergence in Latin American from 1930s - 1980s," NBER Working Papers 5432, National Bureau of Economic Research, Inc.
    5. Schmidt-Hebbel, Klaus & Serven, Luis & Solimano, Andres, 1994. "Saving, investment, and growth in developing countries : an overview," Policy Research Working Paper Series 1382, The World Bank.
    6. Boggio, Luciano, 1996. "Growth and international competitiveness in a 'Kaldorian' perspective," Structural Change and Economic Dynamics, Elsevier, vol. 7(3), pages 299-320, September.
    7. Rodrik, Dani, 1995. "Trade Strategy, Investment and Exports: Another Look at East Asia," CEPR Discussion Papers 1305, C.E.P.R. Discussion Papers.
    8. Philippe Burger, 2014. "Facing the Conundrum: How Useful Is the “Developmental State” Concept in South Africa?," South African Journal of Economics, Economic Society of South Africa, vol. 82(2), pages 159-180, June.
    9. Alan M. Taylor, 1995. "Growth and Convergence in the Asia-Pacific Region: On the Role of Openness, Trade and Migration," NBER Working Papers 5276, National Bureau of Economic Research, Inc.
    10. Jun, Zhang, 2003. "Investment, investment efficiency, and economic growth in China," Journal of Asian Economics, Elsevier, vol. 14(5), pages 713-734, October.
    11. Shang-Jin Wei, 1995. "The Open Door Policy and China's Rapid Growth: Evidence from City-Level Data," NBER Chapters,in: Growth Theories in Light of the East Asian Experience, NBER-EASE Volume 4, pages 73-104 National Bureau of Economic Research, Inc.
    12. Dani Rodrik, 1994. "Getting Interventions Right: How South Korea and Taiwan Grew Rich," NBER Working Papers 4964, National Bureau of Economic Research, Inc.
    13. Pugno, Maurizio, 1996. "A Kaldorian model of economic growth with labour shortage and major technical changes," Structural Change and Economic Dynamics, Elsevier, vol. 7(4), pages 429-449, December.
    14. Li, Kui-Wai, 2009. "China's total factor productivity estimates by region, investment sources and ownership," Economic Systems, Elsevier, vol. 33(3), pages 213-230, September.

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