Growth Experiences of the Asian Economies

Introduction

Although, some economists argue that developed economies have nothing much to learn from the Asian growth experience, we conjecture that the Asian syndrome can provide some useful lessons to other developing economies and those struggling to record any decent rates of growth¹. Therefore, this chapter summarizes the growth experiences of the sampled Asian countries. It first provides a regional overview and proceeds to discuss each of the economies’ growth outcomes, their prospects and constraints to growth. Towards the end, a summary of the short-term growth outlook for the region is also presented. Finer details regarding the macroeconomic indicators and sectoral performances have been avoided because these are easily available from the Asian Development Bank (ADB), United Nations’ (UN) Websites and individual country reports. These details fit poorly into the broad macro-picture projected in this text. In addition, presenting too many minor sectoral details would pronounce economic growth as being synonymous to the short-term improvements in output, rather than it being a more comprehensive longer-term welfare enhancement mechanism. As is stated in this text, economic growth must be understood as a process for sustaining long-term prospects of creating welfare enhancing outputs.

The details in this chapter are important because the analysis presented later tends to reflect on the stated growth outcomes of these economies. However, unlike the above international institutions which produce a periodic review, what is included below is a snapshot of the economies’ growth paths from 1960-2010 highlighting the broad macro picture which has been of interest to many readers of economics. It is to the disbelief of many that this region grew so significantly in the last four decades or so, especially by working closely with China (but not so much with Japan) and integrating well into the global markets. What surprises many is their pace of growth. The sub-region (EAEs) has shown very strong performance in this period, see details in Chapter 1; also summarised below for brevity. The Asian economies were nowhere known to be significant in the 1950s and today are in the centre stage of world growth and trade. It seems that South-South trade did work as strongly as anticipated, but these economies have sourced markets in the developed countries. However, there are some serious contagion issues which make the Asian economies highly vulnerable to international developments. It is true that since productive resources have moved from developing (including from these economies) into the developed world, the developing economies’ advancement to respectable affluence levels is strongly undermined by the first order threats resulting from intense competition in trade, relative dis-advantage in technology, unstable markets and domestic economic fragility. Yet even then, the Asian economies have shown that the quest for growth is the key to economic success, everything else (to them, at this stage) seems to remain secondary. This has led to a second round re-thinking on the quest for growth in Asia. Raising income disparity, climate change and excessive market penetration are on the high of the list of issues being discussed on these economies. The fact that they face intense competition (reflected in their terms of trade) and are affected by resource deficiencies imply that their growth trajectories will be shaped with relatively higher difficulties compared to the developed economies. Therefore, this regional sample is an important and interesting one for investigation. This chapter (and also the text), is restricted from delving into development issues facing these economies although some have only been mentioned. This is because I do not want to shift the focus from economic growth to debates on development.