Transcript IHEID 2008 SP-IAMG - Graduate Institute of International and

IHEID
2008 Summer Programme
International Affairs and Multilateral Governance
Conference, Wednesday July 2 2008
The “East Asian Miracle” Revisited
Jean-Luc MAURER
Professor in Development Policies
Director Centre for Asian Studies
The Graduate Institute
Origin and interest of the EAM concept
• The so-called “East Asian Miracle” (EAM) is the major
regional-wide economic and development success story
which has happened in the “Third World” since WWII.
• The EAM concept, elaborated by the World Bank in its
famous 1993 report resulted from a subtle ideological
compromise between market fundamentalism and the
recognition that the state had been playing a major role.
• An analysis of the EAM (and its further debacle during the
1997-98 Asian Financial Crisis, or AFC) constitutes the
best possible example of the linkages existing between
development and globalization, and their effects on
economic growth, poverty and inequality.
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Historical process and animal naming
• In the 50’s and the 60’s, South Korea, Taiwan, Hong Kong
and Singapore launched a successful process of very rapid
industrialization. Soon known as the “Four Little Dragons”,
they followed the example previously given by Japan in a
so-called “Flying Geese Pattern” of regional development.
• In the 70’s and 80’s, Thailand, Malaysia and Indonesia,
sometimes referred for their part as “Asian Tigers”, joined
the club of these Newly Industrialized Countries (NIC’s).
• In 1993, the World Bank study on the “East Asian Miracle”
focused on these 7 countries, putting them in the same new
category of High Performing Asian Economies (HPAE’s).
• Since the early 90’s, the “East Asian Miracle” concept can be
extended to Vietnam and China given their performance.
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The EAM Map of Asia
Scope and linkages
QuickTime™ et un
décompresseur TIFF (LZW)
sont requis pour visionner cette image.
Source: F. Muniga, OCD
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EAM countries: demographic dimensions
Figures 2003
Source: UNDP
Japan
Land area
(000 sq. km)
Population
(million)
AAPGR (%)
1975-2003
Urban pop.
(% of total)
377.7
127.7
0.5
65.5
South Korea
99.2
47.5
1.1
80.3
ROC Taiwan
35.9
{±25.0}
{<1}
{>70}
Hong Kong
1.1
6.9
1.6
100.0
Singapore
0.6
4.2
2.2
100.0
Thailand
513.2
63.1
1.5
32.0
Malaysia
329.7
24.4
2.5
63.8
Indonesia
1919.4
217.4
1.7
45.5
China
9561.5
1’300.0
1.2
38.6
329.5
82.0
1.9
25.8
Vietnam
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The three major characteristics of the
“East Asian Miracle”
• High and sustained economic growth
About 6% a year from 1960 to 1995, that is 3 times more
than Latin America and 8 times more than Africa.
• Spectacular poverty reduction
From more than 70% in 1960 down to 57% in 1975, 21%
in 1995 and most probably less than 15% today.
• Social inequality remains moderate
In 1990, in Taiwan, Q5 is only five times richer than Q1,
against around 20 to 25 times in Mexico or Brazil.
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EAM: Growth with Equity
Source: J. Page, WB, 1993
QuickTime™ et un
décompresseur TIFF (LZW)
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Newly Industrialized Countries (NIC’s)
as an approximation of EAM countries:
the five key indicators
•
•
•
•
•
Share of agriculture in GDP ≤ 20%
Share of industrial manuf. in GDP ≥ 20%
Saving rate ≥ 15%
GDP per capita ≥ US$ 1’000
HDI ≥ to 0.75
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Position of the “East Asian Miracle” NICs, 1997
Source: Yearbooks
FEER and UNDP
HD Reports
AGR/GDP
(%)
IM/GDP
(%)
SR
(%)
GDP/pc
(US$)
HDI
1995
Japan (1994)
2
27
32
34’630
0.925
South Korea
7
29
39
8’260
0.855
ROC Taiwan
3
29
26
11’597
0.920
Hong Kong
±0
11
33
9’200
0.882
Singapore
±0
27
51
22’500
0.861
Thailand
10
29
35
21’650
0.749
Malaysia
14
32
37
3’480
0.760
Indonesia
17
24
30
880
0.663
China
21
37
44
530
0.683
Vietnam (1994)
28
22
13
200
0.660
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The five economic factors explaining the
EAM according to the World Bank
• Strict macroeconomic stability
(BOP and budget deficits, inflation, debt, exchange rate, etc.)
• Appropriate public investment policies
(infrastructures and human resources)
• Export-led growth strategy
• Efficient use, combination and market allocation
of productive factors (labour versus capital)
• Flexible and adjustable economic policies
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Five aspects of a broader multidimensional
explanation of the EAM
• “Nothing arrives by chance”: history and culture are
in the end the main explanatory factor
• Strong authoritarianism and political legitimacy
based on the capacity to “deliver” development
• “Governing the market”: States and public policies
have been playing a key role in the process
• “First things first”: priority to agricultural and rural
development translating into broad-based and propoor growth strategy
• A very favourable international & regional context
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EAM countries growth performance, 1965-1995
Source: V. Ahuja
et. al, World Bank
1997
GDP/pc1965 GDP/pc1995
(1995PPP$)
(1995PPP$)
Growth %
1965-80
Growth %
1980-90
Growth %
1990-95
South Korea
1’528
13’269
6.8
7.5
6.5
ROC Taiwan
2’324
15’191
7.5
6.3
5.7
Hong Kong
4’843
26’334
6.2
5.1
4.9
Singapore
2’648
23’350
8.5
6.5
7.4
Thailand
1’570
6’723
4.6
6.4
6.8
Malaysia
2’271
9’458
3.6
4.2
6.0
Indonesia
817
3’346
4.8
4.4
5.4
1’736
2’475
2.9
-0.4
0.1
Vietnam
n.a.
1’308
-0.8
4.7
5.8
China
771
2’479
3.5
8.4
9.2
Philippines
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Main comments on economic growth
• For the major part, the economic growth performance of the
“Four Little Dragons” has taken place from the mid-60’s to
the late-80’s, in the midst of Cold War, behind strong trade
barriers and protections of infant industries.
• Since the beginning of the current phase of globalization
and the acceleration of economic liberalization, their
growth performance has clearly tended to slow down.
• Things are well marked but comparable for the three other
HPAE’s and there are signs that they basically follow the
same trend, with a time differential of 10 to 20 years.
• This does not apply to China and Vietnam, whose later
departure, starting level, huge needs and size probably
explain that growth continues to be sustained up to now.
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EAM countries poverty reduction results, 1975-95
Source: ibid
Volume
1975
Volume
1985
Volume
1993
Volume
1995
East Asia
716.8
524.2
443.4
345.7
57.6
37.3
27.9
21.2
EA-China
147.9
125.9
91.8
76.4
51.4
35.6
22.7
18.2
China
568.9
398.3
351.6
269.3
59.5
37.9
29.7
22.2
Thailand
3.4
5.1
<0.5
<0.5
8.1
10.0
<1.0
<1.0
Malaysia
2.1
1.7
<0.2
<0.2
17.4
10.8
<1.0
<1.0
Indonesia
87.2
52.8
31.8
21.9
64.3
32.2
17.0
11.4
Philippines
15. 4
17.7
17.8
17.6
35.7
32.4
27.5
25.5
n.a.
44.3
37.4
31.3
n.a.
74.0
52.7
42.2
Vietnam
%
1975
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%
1985
%
1993
%
1995
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Main comments on poverty reduction
• The “Four Little Dragons” are not part of the picture since
poverty had already been eradicated before 1975.
• Globally, the number of people suffering from most severe
forms of poverty (< 1 US$ a day) has been halved between
1975 and 1995 in the whole of East Asia, China included.
• But China still makes about 78% of the poor in East Asia.
• In Thailand and Malaysia, where poverty had already
diminished before 1975, it had fallen below 1% in 1995.
• In Indonesia, the number of poor people has been divided
by 4 times and their proportion by 6 times in 20 years.
• In Vietnam, the beginning of the trend is as impressive.
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EAM countries inequality trend, 1970-95
Country and period
Variable measured
Gini at
beginning
Gini at the
end
Hong Kong, 1971-91
Income per household
40.9
45.0
Singapore, 1973-89
Income per household
41.0
49.0
ROC Taiwan, 1985-95
Income per household
29.0
31.7
South Korea, 1970-88
Income per household
33.3
33.6
Income per capita
50.1
45.9
Thailand, 1975-92
Expenses per capita
36.4
46.2
Indonesia, 1970-95
Expenses per capita
34.9
34.2
Income per capita
29.9
38.8
Philippines, 1985-94
Expenses per capita
41.0
42.9
Vietnam, 1993-2003
Expenses per capita
35.5
±40.0
Malaysia, 1973-1989
China, 1985-95
Sources: ibid WB 1997
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Main comments on inequality trend
• Inequality has increased on 8 out of the 10 countries over
the period of time concerned, but with marked differences.
• For Hong Kong, Singapore and the Philippines, inequality,
which was already high, has become even higher.
• Starting from moderate to rather low levels, inequality has
literally exploded in Thailand, China and even Vietnam.
• Inequality has also slightly increased in Taiwan and Korea,
but was starting from low and remains low to moderate.
• Inequality has decreased only in Malaysia and Indonesia,
but it was starting from high and keeps high in the former
while it is still rather moderate in the latter.
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A recap on the « East Asian Miracle »
• The process of accelerated development combining growth
with equity which has taken place in East Asia from the
mid 50’s to the mid-90’s is definitely not a “miracle” and
can perfectly be explained in rational terms.
• For the major part, this so-called “miracle” has taken place
before the end of the Cold War in 1989 and the beginning
of the wave of economic liberalization characterizing the
present phase of globalization.
• Since the early 90’s, the acceleration of this liberalization
trend has on the contrary had adverse effects on growth and
equity and its extension to the financial sector is largely
responsible for the 1997-98 debacle of the Asian Financial
Crisis (AFC) which will put an end to the “miracle”.
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That’s all folks!
Thanks for your attention
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