Question

A, B, C. In the 1960s, the countries of East Asia (with the exception of Japan) were some of the world’s poorest. Separately answering as parts A, B, and C, give and explain three separate methods that have been responsible for the high economic growth in East Asia.

(note: Do not simply say that “capitalism replaced socialism.” There still are many poor capitalist countries in the world today.)

Answer 1

There are several reasons attributed to the miraculous growth of East Asian economies post-1960. Some say that it was the draconian measures used by them (like china) which lead them to achieve exponential growth and some attribute it to the pro-growth, textbook-like strategies which we usually came across, which lead to their rapid rise. ut considering the region as whole and the picking out similarities in what they did to achieve such exponential we can list 3 ways or methods, contributing to their growth:

Part A:

Focusing on Macroeconomic Stability and Export Growth: Pursuing prudent fiscal management path and keeping inflation at manageable rates was their prime focus and they were able to rein in fiscal deficit whenever it was seen building up. Their inflation rates were much lower in the 30 year period starting from 1960 compared to other lower-income countries. because inflation rate was moderate and predictable, real interest rates were far more stable than other countries. Such macroeconomic ic stability encouraged long term private savings and the effect on real interest rates encouraged financial savings (real interest rates were both relatively high and stable.). Promotion of pro export growth strategies also helped them in increasing their export to developed counties such as the nd other European countries.

Part B:

Building the institutional basis for growth: Although the leaders of the East Asian economy had been either authoritarian or paternalistic,but there is no denying they also gave voice and authority to technocratic elite and to other leaders of the private sector. Some other principles which contributed to their growth story are also worth consdering:

1. The principle of shared growth.
2. Creating a business-friendly environment.
3. Using deliberation councils.

Part C:

Accumulating Human and Physical Capital: By utilizingg the strength of their institutions, and by a combination of fundamental and intervenstionist policies, they rabidly accumulated required human and physical capital. Such fundamentals include providing adequate infrastructure, education and secure financial institutions. Interventions, though notorious, included mild repression of interest rates, mandatory savings mechanisms and socialization of risk. Other factors which lead to it were Flexible labour markets, openness to foreign technology, rpomoting specific industires such as heavy industries, granting subsidies and making reglation investor friendly.