Edited by Sanjaya Lall and Shujiro Urata
Chapter 3: Competitiveness and technology: an international comparison
Hiroki Kawai and Shujiro Urata1 1. INTRODUCTION The economies of East Asia achieved remarkable economic growth in the post-World War II period. Indeed, the World Bank (1993) published a study entitled The East Asian Miracle to examine the factors that underlay this export-led growth. It analysed the 1960–89 period and attributed success to several factors including rapid accumulation of physical and human capital, export-oriented trade policy, sound macroeconomic environment and well-functioning institutions. The report also emphasized rapid expansion in productivity as an important factor that contributed to remarkable economic growth. The World Bank study attracted a lot of attention. Economists and policymakers were particularly interested in the role of government in economic development, because the study acknowledged successful cases of government intervention in the sectoral allocation of resources. This view was quite diﬀerent from the minimalist view of the government that had been popular earlier. Some observers argued that the success of East Asia was largely due to active government intervention, while others argued that it was attributable to the market mechanism. Consensus has yet to be reached on the issue and the debate on the appropriate role of the government in economic development goes on. The World Bank study instigated another interesting debate on the sources of economic growth in East Asia. Several researchers questioned the contribution of productivity increase to economic growth in East Asia. The World Bank calculated high total factor productivity (TFP) growth for East Asian economies. Krugman (1994) questioned the validity of these...
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