Lessons from the Asian miracles

MUCH has been written over the past year about the emerging 'miracle' economies of eastern Asia and their relevance to the rest of the world - especially to other developing countries trying for the same level of success.

Having just come from a conference in Singapore on a related set of issues, I am struck by how much is known about these extraordinary successes but also how much is not known. For example, it is relatively easy to identify the components that produced the spectacular growth rates of between 6 and 18 per cent but not so easy to explain the processes that were used or, more importantly, the players involved. Who took the critical decisions that led to success and why did they take them?

In South-east Asia and China today there is a certain smugness that emerges in talks with Westerners, based on the growing conviction that Asians have got it right and the rest of the world has got it wrong.

That is not to say that all of these miracle economies are the same, or, indeed, achieved their successes in the same way. Rather, there is growing consensus among Asians that they share certain common values and traits that lift their economies above chronic underdevelopment in Africa and above the growing violence, unemployment and stagnant growth that plague many of the Western economies. In other words, the Asian 'model', if there is such a thing, is the better course to follow.

The Asian specialists at the Singapore conference, sponsored by the Salzburg seminar, listed some of the common components of this model while also acknowledging the big differences among east Asian economies and China.

In addition to a favourable external environment, many of these common features are well known: overarching strategies for export-oriented, investment-driven economic growth; strong business-government partnerships; stable macroeconomic policies; able bureaucracies populated by technocrats and others who operate in a sufficiently transparent manner as to minimise corruption; a strong emphasis on education in addition to other social capabilities, such as family structures, that promote progress; and, above all, flexibility.

It should also be noted that most started with a relatively clean slate on which to write such programmes and that almost all were and are playing 'catch up' with the West.

Still, it is very clear that older Western economies may have as much to learn from the Asian experience as do poorer, less developed countries.

This is not to say that all is perfect in these regimes and will remain so. But it does imply that the successful Asian countries are working simultaneously with economic and social capabilities to achieve broader gains that benefit large segments of society - not just the favoured few. This sense of equity, when it works, is what produces consensus on broader national goals that are mainly handed down from the top by relatively enlightened bureaucrats who seem to have gained the people's trust instead of their enmity.

For example, during Singapore's 1985 recession, the government went to workers and negotiated a 10 per cent cut in social security payments in order to cut the wage bills of corporations to stimulate the economy. This was accomplished without the usual demonstrations and protests and the payments were made up after the recession, over a period of three years. The 'informal' deal succeeded because it was perceived as good for all.

Interestingly, according to the work of Thomas Rohlen of Stanford University, to George Yeo, Singapore's Minister of Culture, and others, the successful city state played a greater role in the success of these economies than did the more traditional 'nation state' structure. In other words, small can be more beautiful, particularly when the smaller economic entity becomes a driving force within the bigger whole.

Singapore's success as a highly disciplined city state, for example, has prompted regions of China not only to study it as a model but also to hire Singaporean advisers to guide new economic and social initiatives.

It is also clear that the successful Asian economies have tended to copy each other, unlike older Western economies that tend to go their own separate ways. A recent case in point is India, which has benefited very much from its successful plan to catch up with its arch rival, China.

However, it was not until 1991 that India threw out its old Soviet-style economic structure in favour of free markets and free trade, a liberalisation strategy that China had adopted 15 years previously, in 1979. Thus India has a lot of catching up to do. China's exports, for example, are about to cross the USdollars 100bn mark - four times the volume of India's.

But India's economy has taken a huge leap forward, achieving a rate of export growth of 21 per cent, foreign exchange reserves of USdollars 14bn, and direct foreign investment of USdollars 4bn. Furthermore, India's economic strengths can be viewed as China's weaknesses: an educated urban middle class of 300 million people; widespread use of English (now the world's preferred language of transaction); the world's third largest reserve of skilled manpower; a thriving private enterprise base; a big industrial base; a patent protection system; functioning stock markets; and an impeccable record of repatriation of foreign capital.

All of this suggests that, with the right policies, India could catch up to become an equally powerful economic player in the region.

In India's case, we know that an unlikely government has benefited from taking the China challenge very seriously and allowing major players such as Finance minister, Manmohan Singh, to inaugurate reforms that have not only silenced domestic left-wing critics but also integrated the economy more into the fast developing Pacific region.

The lessons would be better if we could trace the who's and why's for the entire region.

Start your day with The Independent, sign up for daily news emails
football This was Kane’s night, even if he played just a small part of it
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
Threlfall says: 'I am a guardian of the reality keys. I think I drive directors nuts'
voices The group has just unveiled a billion dollar plan to help nurse the British countryside back to health
The Westgate, a gay pub in the centre of Gloucester which played host to drag queens, has closed
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss