284
A
fter World War II the
economies of a cluster of
East Asian nations grew
dramatically. Led by a new set of
actively interventionist governments,
these countries were transformed
from economic backwaters into
dynamic industrial powers in just
a few decades. The so-called Asian
Tigers—South Korea, Hong Kong,
Singapore, and Taiwan—were
followed by Malaysia, Thailand, and
Indonesia, and then by China. These
countries achieved sustained
growth in income per head faster
than in any other region. GDP (gross
domestic product, or total national
income from goods and services) is
often used to measure a nation’s
wealth. In 1950, South Korea’s GDP-
per-person (GDP divided by the size
of the population) was half that of
Brazil’s; by 1990, it was double; by
2005, three times as high. This kind
of growth resulted in a remarkable
decline in poverty. By the late 20th
century the original four Asian
Tigers had living standards that
rivaled those of Western Europe, a
historically unprecedented change
in fortunes that has been dubbed
the “East Asian miracle.”ASIAN TIGER ECONOMIES
The East Asian
state governed
the market.In this way the state
led the market, rather
than just following it.The state made the
investments and then
enforced performance
criteria on those firms,
helping efficiency.East Asian
countries aimed to build
competitive advantage
in new industries.This allowed the state
to promote industrial
development in
certain directions.This required a
range of investments
that private firms could
not provide.IN CONTEXT
FOCUS
Growth and developmentKEY EVENT
Japanese investment
begins flowing into South
Korea’s economy in 1965.BEFORE
1841 German economist
Friedrich List argues that
protecting industry would
help economies to diversify.1943 Polish economist Paul
Rosenstein-Rodan argues that
poor countries need a “big
push” to develop through
state investment.AFTER
1992 US economist Alice
Amsden claims South Korea’s
use of performance criteria
fostered industrial growth.1994 US economist Paul
Krugman argues that the East
Asian takeoff was a result of
increases in physical capital
rather than true innovation.The environment from which the
Asian Tigers emerged was shaped
by government intervention and
dense links between the state and
the economy, an economic model
that came to be known as the
“developmental state.” After World
War II there had been huge
expectations of development in
poorer nations, and the goal of rapid
economic advancement became the
driving force behind government
economic policy. Powerful
bureaucracies were involved in
directing the economic activities
of the private sector in ways that