Sustaining Growth and Performance in East Asia
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Sustaining Growth and Performance in East Asia

The Role of Small and Medium Sized Enterprises

Edited by Charles Harvie and Boon-Chye Lee

This third book in the series focuses on how small and medium sized enterprises (SMEs) contribute to achieving and sustaining growth and performance in their economies, as well as the ways in which governments can assist and enhance that contribution. This is of particular concern given the trauma suffered by East Asian economies in the wake of the financial and economic crisis of 1997–98.
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Chapter 3: The Contribution of Micro-enterprises to Regional Economic Recovery and Poverty Alleviation in East Asia

Charles Harvie


Charles Harvie 3.1 INTRODUCTION The economic and social crisis that afflicted East Asia1 from mid-1997 produced the biggest setback to poverty reduction in the region for several decades. Prior to the crisis, East Asian countries had achieved spectacular welfare gains. Consistently high rates of economic growth were translated into quantifiable welfare improvements, primarily because growth was largely inclusive – the poor shared in the benefits of development. Public provisioning of social services was widespread, and the productivity of the poor and their employment opportunities increased enormously. The absolute number of poor people fell and the severity of poverty declined. Between 1975 and 1995 poverty in East Asia2 dropped by two-thirds, and the pace of poverty reduction was faster than in any other developing region. In 1975, six out of ten East Asians lived in absolute poverty according to this standard; by 1995, the ratio had dropped to two out of ten. This meant that the number of poor in the region more than halved, from 720 million to 345 million (World Bank, 1997). Further, the rate of decline accelerated after 1985. The number of people in poverty fell by 27 per cent in 1975–85; in 1985–95 the decline was 34 per cent (World Bank, 1998). Since 1975 the region also achieved substantial gains in life expectancy, infant mortality and literacy rates. These are even more impressive when compared with social developments in other regions, or indeed developed countries during their comparable decades of development. The onset...

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