OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Asian Transformations OUP CORRECTED PROOF – FINAL, 05/08/19, SPi UNU World Institute for Development Economics Research (UNU-WIDER) was established by the United Nations University as its first research and training centre and started work in Helsinki, Finland, in 1985. The mandate of the institute is to undertake applied research and policy analysis on structural changes affecting developing and transitional economies, to provide a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and to promote capacity strengthening and training in the field of economic and social policymaking. Its work is carried out by staff researchers and visiting scholars in Helsinki and via networks of collaborating scholars and institutions around the world. United Nations University World Institute for Development Economics Research (UNU-WIDER) Katajanokanlaituri 6B, 00160 Helsinki, Finland <www.wider.unu.edu> OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Asian Transformations An Inquiry into the Development of Nations Edited by DEEPAK NAYYAR A study prepared for the United Nations University World Institute for Development Economics Research (UNU-WIDER) 1 OUP CORRECTED PROOF – FINAL, 05/08/19, SPi 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. 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OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Foreword Gunnar Myrdal published his magnum opus Asian Drama: An Inquiry into the Poverty of Nations in 1968. Described by one of his peers as a cheerful pessimist, Myrdal was deeply negative about Asia’s development prospects and this pessimism was manifestly evident across the pages of his tome. However, the half-century since publication has witnessed a most remarkable social and economic transformation in Asia that would have been difficult for Myrdal to imagine, let alone predict, at the time of his writing. During discussions with Deepak Nayyar—a former Chair of the UNU-WIDER Advisory Board—he proposed an in-depth inquiry into the how and why of the dramatic transformations within Asia since Myrdal’s major work, looking at how nations can develop across time given their different national characteristics, political settlements, natural endowments, and starting points of development. As it turned out, that conversation pre-launched the UNU-WIDER research pro- ject, Asian Transformations—An Inquiry into the Development of Nations. The project maps and analyses the story of progress and economic development in Asia, with the region’s transformed significance in the world economy, and reflects on what future decades might hold. This book, with its comprehensive chapters by eminent economists and social scientists, is the distillation of the entire academic project, making it essential reading for economists, policymakers, and scholars and students of development. Valuable lessons can be drawn from the research—successes, failures, or mixed outcomes—that will help in thinking about the economic prospects of countries, whether leaders or laggards at the point of departure. I sincerely thank the contributors for their studies, which share with us their individual expertise, and particularly Deepak Nayyar for bringing this very rich academic inquiry to full fruition. UNU-WIDER gratefully acknowledges the support and financial contributions to its research programme by the governments of Finland, Sweden, in this case particularly the Swedish International Development Cooperation Agency—Sida, and the United Kingdom. Without this vital funding our research and policy analysis work would be impossible. Finn Tarp Director, UNU-WIDER Helsinki, December 2018 OUP CORRECTED PROOF – FINAL, 05/08/19, SPi OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Preface In early September 2016, I was browsing through the bookshelves in my study, when I spotted the three volumes of Gunnar Myrdal’s Asian Drama, which I had read as a graduate student in economics at Oxford soon after it was published. I had returned to it off and on while working on development or on India. But this time around, it was after a decade if not longer. I decided to re-read Appendix 3 on economic models, with its critique of capital–output ratios, in the context of development planning. This was, in fact, written by Paul Streeten, who was a part of the Myrdal team for Asian Drama. They were close friends for years, as Streeten had translated and edited Myrdal’s earlier work on economic theory and on methodological problems. Paul was also my supervisor as a doctoral student at Oxford. It was the beginning of our lifelong friendship. And I met Gunnar Myrdal once with Paul Streeten. The accidental browsing brought back memories from that time. It struck me that, in 2018, it will be fifty years since the book was pub- lished. This led me to think that a study, which analyses the story of economic development in Asia, over this span of half a century, would be a wonderful idea. As it happened, just a week later, I was participating in the WIDER Annual Conference at Helsinki. It occurred to me that UNU-WIDER, located in the Nordic world, with its focus on development would be the perfect institutional base for such a study. And I mentioned this adventurous idea to Finn Tarp, Director of UNU-WIDER. He said that he would think about it and explore possibilities. Barely two months later, he was in touch with me to say that UNU- WIDER would like to collaborate on such a study. At a first step, I wrote a short concept note setting out the idea. In mid-February 2017, this was discussed in an informal brainstorming meeting with Ernest Aryeteey, Ronald Findlay, Justin Lin, Frances Stewart and Robert Wade, in Helsinki—Finn Tarp and Tony Addison were also present and participated in the discussions. The comments and suggestions from all the participants were most constructive. The study was then conceptualized in terms of structure and con- tents. The project began life in late March 2017 as authors were commissioned over the next three months. The complete first drafts of the papers written for the project were discussed at a workshop of authors at the Central Institute for Economic Management, in Hanoi, Vietnam, on 9–10 March 2018. The discus- sions were rich, engaging, and productive. Revised versions of the papers were discussed further at a second workshop of authors at Fudan University, Shanghai, China, on 29–30 June 2017, where Guanghua Wan, a contributor to this volume, was our gracious host. This meeting provided valuable suggestions for the authors OUP CORRECTED PROOF – FINAL, 05/08/19, SPi viii Preface and the editor. Selected aspects and highlights of the study were also presented at a plenary session of the WIDER Annual Conference in mid-September 2018, which was followed by a helpful discussion. I would also like to record my appre- ciation of the work done by referees, who reviewed draft papers at different stages. Their evaluation and comments helped improve the quality of the volume. Above all, I am grateful to the contributors for their patience, understanding, and effort in putting up with my demands for successive rounds of revisions. This book, and its companion volume, Resurgent Asia: Diversity in Development, are the outcome of the UNU-WIDER research project Asian Transformations. I am indebted to Finn Tarp for his acceptance of the idea and his commitment to what seemed an exceedingly difficult task at the time. Somewhat late in the lifecycle of the project, I also persuaded him to write a chapter on Vietnam for the volume. In the journey to completion, the unstinted support from Finn Tarp was invaluable. I owe a special word of thanks to the staff at UNU-WIDER in Helsinki, who lent wonderful support throughout over two years even though I lived in faraway New Delhi. Tony Addison, with his perceptive and interesting ideas, was a lively participant and discussant at all our meetings and workshops.