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The Asian Model: A Crisis Foretold?

  • Singh, Ajit

The East Asian countries achieved extraordinarily fast economic growth during the last four decades. Indeed, it would be no exaggeration to say that they represented the most successful case of rapid industrialisation and sustained economic growth in the history of mankind. An economy like South Korea’s was unequivocally industrially backward in the mid-1950s. Its per capita industrial output was at the time US$ 8 compared with US$ 7 for India and US$ 60 for Mexico. By mid 1990, the country was the fifth largest car producer in the world, the largest producer of DRAM microchips, and the home of the world’s most efficient steel industry. Its per capita income had increased from x dollars to nearly US$ 10,000 over a thirty-five year time span. The Korean story of fast industrialisation and technological catch up is by no means unique. The other three countries in the Gang of Four - Taiwan, Hong Kong and Singapore also achieved similar economic success. More recently, these four countries were followed by Malaysia, Thailand and Indonesia who also recorded sustained and rapid growth of per capita income. Significantly, these “miracle” countries not only expanded at a fast rate but they also did so without any worsening of income distribution. Their record of poverty reduction has been truly remarkable. As Professor Joseph Stiglitz, the World Bank’s Chief Economist, notes: “In 1975, six out of 10 Asians lived on less than $1 a day. In Indonesia, the absolute poverty rate was even higher. Today, two out of 10 East Asians are living in absolute poverty. Korea, Thailand and Malaysia have eliminated poverty and Indonesia is within striking distance of that goal. The USA and other western countries, which have also seen solid growth over the last 20 years but with little reduction in poverty rates, could well learn from the East Asian experience (Stiglitz, 1998).”

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24683.

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Date of creation: 1998
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Handle: RePEc:pra:mprapa:24683
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  1. Singh, Ajit, 1998. "Liberalisation, the stock market and the market for corporate control: a bridge too far for the Indian economy?," MPRA Paper 54929, University Library of Munich, Germany.
  2. Singh, Ajit, 1994. "Openness and the market friendly approach to development: Learning the right lessons from development experience," World Development, Elsevier, vol. 22(12), pages 1811-1823, December.
  3. Amsden, Alice & Singh, Ajit, 1993. "The optimal degree of competition and dynamic efficiency in Japan and Korea," MPRA Paper 54982, University Library of Munich, Germany.
  4. Aoki, Masahiko, 1990. "Toward an Economic Model of the Japanese Firm," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 1-27, March.
  5. Ajit Singh, 1998. ""Asian Capitalism" and the Financial Crisis," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1998-15, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  6. Steven Radelet & Jeffrey D. Sachs, 1998. "The East Asian Financial Crisis: Diagnosis, Remedies, Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 1-90.
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