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.

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

£30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

Selby Jennings: C++ Developer – Hedge Fund – New York

$80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

Selby Jennings: Java Developer Enterprise Specialist –Paris,France

€30000 - €50000 per annum, Benefits: Competitive Bonus: Selby Jennings: Java D...

Selby Jennings: QA Engineer Lead – Hedge Fund – Chicago

$60000 - $90000 per annum, Benefits: Competitive Bonus and Employee Investment ...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible