East Asia, in particular South Korea and Taiwan, has a curious history. In the 1950s, its economies were considered hopeless basket cases, particularly the two largest ‘tiger’ or ‘dragon’ countries of the ‘first generation’. During the 1980s, the region became the ‘Asian miracle’, hailed as a model of successful development, and wrongly used as a vindication of neoliberal ideology. The crash of 1997 brought about a very abrupt change of mainstream opinion. Suddenly, the World Bank (1999a) asserted - in contrast to its ‘Asian Miracle’ study - that East Asia had not followed the Washington Consensus. The economic systems and the very same policies that had led to the ‘economic miracle’ were now described as deplorably inefficient and flawed, mostly by the same people who had marvelled at the Asian success story shortly before, claiming it to be the result of applying their policy advice. This new interpretation makes one wonder how and why success could be achieved in the past. One may wonder even more about the quick change of opinion happening virtually overnight. Ignoring one’s own recent views actually appears to be bliss. Our analysis of economic policies before the crash focuses on the first generation of tigers, in particular on the two main ‘old tigers’, Korea and Taiwan, because interventionist policies were most pronounced there. They were the most advanced in 1997. Also the discussion on the Asian success has mostly centred on them. NON-ECONOMIC FACTORS: THE HELPFUL PANACEA During the 1950s and 1960s, Latin America, not...
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