ASIXS "MIRACLE' ECONOMIES Page Intentionally Left Blank ASIXS ~MIRACLE' ECONOMIES
Total Page:16
File Type:pdf, Size:1020Kb
ISBN 978-0-87332-884-5 www.routledge.com 9 780873 328845 ASIXS "MIRACLE' ECONOMIES Page Intentionally Left Blank ASIXS ~MIRACLE' ECONOMIES Jon Woronoff Second Edition First published 1992 by M.E. Sharpe Published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright© 1992 Taylor & Francis. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Notices No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use of operation of any methods, products, instructions or ideas contained in the material herein. Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility. Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Woronoff. Jon. Asia's "miracle" economies I by Jon Woronoff. -2nd ed. p.cm. Includes bibliographical references and index. ISBN 0-87332-883-3. ISBN 0-087332-884-1 (pbk.) I. East Asia-Economic policy. 2. East Asia-Economic conditions. I. Title. HC460.5.W68 1991 338.959-dc20 91-4178 CIP ISBN 13: 9780873328845 (pbk) Contents Foreword............................... 5 PROLOGUE: LOOKING EAST . 7 PART ONE: THE PLACES . 17 1 Japan's Two "Miracles" . 25 2 Taiwan, Industrial Island . 63 3 Korea, Man-Made Miracle . 91 4 Singapore, Capitalist Haven . 121 5 Hong Kong, Capitalist Paradise . 142 PART TWO: THE POLICIES . 165 6 Where There's A Will................. 171 7 Diverse Faces of Capitalism . 191 8 Conjuring Up Industries . 207 9 Upgrading Exports . 228 10 Downgrading Imports . 245 11 Technological Leapfrogging . 262 12 Age ofNeo-Development . 283 PART THREE: THE PROSPECTS . 303 13 New Challenges . 309 14 Allies Or Rivals . 327 15 Asian Spillover . 343 16 East Confronts West . 359 EPILOGUE: KEEPING THE "MIRACLE" ALIVE..................... 375 Bibliography . 395 Index................................... 407 Foreword When this book was first written, not so many years ago, there was good reason to complain that public opinion was overlooking an extraordinary phenomenon. In a world in which most developing countries could show only modest growth, a small band of East Asian economies were boom- ing. They were growing at rates which far exceeded the norm, rates so high that they could almost be regarded as "miraculous." One of those countries was Japan, increasingly recognized as an economic force. But Hong Kong, Singa- pore, Korea and Taiwan were still largely ignored. In the meanwhile, most observers have realized their mis- take and focused on Asia's "miracle" economies. And many are overreacting. There are endless reports of spectacular ac- complishments and unique successes. The policies and prac- tices have been described and dissected. Export orientation, once dismissed as inferior to the traditional development strategy of import substitution, is now touted by academics, economists, and politicians. The media are having a heyday with stories of dynamic companies, gifted entrepreneurs, tireless and selfless workers, love of education, worship of harmony, and a wondrous Confucian ethic. 6 Foreword So, it is about time for me to swing in the other direction. Yes, what has been achieved by these five countries is admi- rable, impressive, and exceptional. But it is not quite miracu- lous. This is why I have always put the word miracle in quotation marks. The reason it appears so, as stated in the Foreword to the first edition, is not only that some have done so well, but that many have done so poorly. If I may quote myself: "The sad fact of the matter is that the Five only look like prodigies because they succeeded where a hundred oth- ers failed. It is only on the background of the regrettable and almost inexplicable failure of so many to achieve much in the way of development that one is forced to regard Japan, Taiwan, Korea, Singapore, and Hong Kong with some awe. It is only in this context that one can even think of using such an overblown expression as an economic 'miracle.' " While some things have changed, and I am pleased that these five economies are receiving the attention they merit (and sometimes even excessive praise), the purpose of this book remains the same. It is to show clearly and in practical terms, without unnecessary resort to theory, just what hap- pened. How these countries, which hitherto had been quite unremarkable, began to develop vigorously. What policies and strategies they used. What they did right and, even more importantly, what they did wrong. For they also made plenty of mistakes, if less than others. The hope is that, by viewing their progression, other coun- tries may also learn more about economic development and follow in their footsteps; that they may work their own "mir- acles." And I am thinking not only of desperate, backward countries, but also of supposedly enlightened, advanced ones which have lost their dynamism and perhaps forgotten what development is all about. They can all learn something from East Asia. JON WORONOFF PROLOGUE: LOOKING EAST Page Intentionally Left Blank Looking East 9 It is amazing how hard it can be for people, including the supposed "experts," to perceive even major changes in the world situation until they become unmistakably evi- dent. This blindness is particularly notable in the tenacious failure-or perhaps unwillingness-to realize that a dynamic new center of economic activity was emerging in the East. It required more than a decade after Japan entered a high growth trajectory for it to be taken seriously. Again, not until long after their takeoff were its neighbors Taiwan, Korea, Hong Kong and Singapore acknowledged as rising economies. It is difficult to understand how they could have been overlooked so insistently. The burst of growth in East Asia after the war was truly phenomenal. These coun- tries, one of them defeated in the hostilities and the others hardly more than backward colonies, were given little chance for success. During the early years, in fact, one could scarcely see any improvement and the dismal forecasts seemed to be right. Then, all of a sudden, growth started coming and remained stronger than anywhere else on the globe. By now stacks of statistics are available to convince and enlighten the curious observer. All of these countries repeatedly attained more than I O% growth and averaged rates that were not much lower over stretches of two or more decades. Their gross national product doubled, and then doubled again, so that Japan already accounts for about 10% of world GNP and the others a further 3%. Japan presently boasts a per capita income that is among the highest in the world, Singapore has the second best in Asia, and the rest are ranked among the middle-in- come countries, long since having escaped the category of poor nations. But these statistics only show part of the achievement. It was not merely a question of taking the original 10 Looking East economy they had and boosting production along the same lines. In every country, there was a thorough transformation of the structure as they revamped old sec- tors and branched into new. The larger ones progressed from light to heavy industry while the smaller constantly added further articles. All made considerable advances in- to modern services. This both deepened and broadened the economies, making them stronger and more resilient. Finally, although often neglected or insufficiently stressed, they have all brought very definite benefits to their people. As incomes rose, it was possible to buy more and better food, clothing and housing (the latter sometimes subsidized by the state). The educational systems improved as did the hospitals and social fa- cilities. While the progress was less striking, and some- times still inadequate, headway was made with social legislation to limit working hours and improve condi- tions as well as to accumulate funds for social security and welfare. Yet, it would seem that these achievements were less noticeable than the fact that these activated economies had become so vigorous that they were making waves. It was not long before, for an expanding range of articles, the Five had become ruthlessly competitive. Meanwhile, their technological level rose swiftly, transforming them from copiers into innovators. Their exports kept mount- ing rapidly in a multitude of foreign markets. While this just meant another source of manufactured goods for some, for others it implied fierce rivalry abroad and also at home. Later on, some of them began investing actively overseas. Ultimately, their presence was felt around the world and East Asia could no longer be ignored. It was only when they had become a force to be reckoned with that anyone paid much attention. That is Looking East 11 strange in a public that clamored for economic prog- ress and launched one "development decade" after the other. Surely the addition of one advanced country and four "newly industrialized countries" or NICs, as they were called, was something worth talking about at an earlier stage. But the Five were barely noticed. It may have been that, rather than doing things in what was generally regarded as the "right" way, they did it in an- other way.