Emergence as a Global Economic Power } 683
for imports necessary for industrialization: machinery and equipment, tech-
nology and associated fees, fuels and mineral ores, components, and food for
a growing urban population.^14 After 1945, post-imperial Japan redesigned this
basic model on the premise of alliance with the United States.^15 Again Japan’s
government encouraged expansion of exports, secured control of the foreign
currency gained thereby, and used it for state-guided but market-based im-
port of items necessary for further development as determined by a techno-
cratic and fairly autonomous state planning agency. This model again proved
effective, and by the early 1960s Japan was rapidly catching up with leading
European nations in terms of standard of living and levels of industrializa-
tion. Then, circa 1961, South Korea and Taiwan both began emulating Japan’s
path of state-guided export and import growth. Hong Kong and Singapore
also participated enthusiastically in the emerging East Asian economic sys-
tem, albeit with a more muted state role.
During the 1960s and 1970s, this approach, premised on state-guided
but market-based development, was most definitely not the mainstream of
global development efforts. Far more popular and widespread were either
US-endorsed laissez-faire approaches of comparative advantage, or depen-
dency theory, which called for developing countries to disengage or carefully
limit engagement with the global economy dominated by the advanced cap-
italist countries. Substitution of domestic manufactures for imported goods
whenever possible—import substitution—was a key component of the anti-
“dependency” approach. By the late 1970s, however, people around the world,
especially in China, were taking note of the impressive development of Japan
2000
1800
1600
1400
1200
1000Billions constant 2005 US$800
600
400(^200) China joins
WTO
Japan
PRC
USA
0 Opening
19791981198319851987198919911993199519971999200120032005200720092011
GermanyGermany
Deng’s 2ndDeng’s 2nd
F IGU R E 25-3 Total Exports of Goods and Services