World Bank Report- The East Asian Miracle 1993

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World Bank Report-the East Asian Miracle (1993)

Introductions

East Asia has a tremendous and reputed record of high economic growth which has been

sustainable over the years since 1965-1990s. The region records a massive growth of the

economy with twenty-three states having a progressive economic growth than any other region

all over the world. From the context, the study focuses on the four Tigers of Japan and the four

‘High Performing Asian Economies’(HPAEs) with analysis of how they established and

maintained a stable, high and self-sustaining economy over the years.

The success of the High performing Asian economies has been seen as a major concern to the

policy makers and economic developers in the East Asian region. The biggest query has been on

how the four Tigers; Taiwan, Singapore, South Korea and Hong Kong have been able to beat all

the odds including effects of the World War II aftermath and emerged to be economic giants in

the region (World Bank, 1993, pp. 1-4). Issues of academic, government and policy development

have been the main parameters used to explain the miracle of East Asia economic prowess.

Factors that lead to the Miracle of economic success in East Asia

Apparently, factors that influenced business success in this region have been explained with how

the private sector, government and the market itself have contributed in regulating the trade.

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To understand basically the major element that contributed to the regional economic growth in

East Asia, a comparative study of public policy and economic progress was devised by the Board

of Governors of World Bank during their annual general meeting in 1991 (World Bank, 1993,

pp. 5-7). Though the conclusions drawn from this report was subjected to objection by various

organizations, authorities, and policymakers questioning the credibility and authenticity of the

findings, mode of approach to the topic at hand and involved parties, the report seems to be very

comprehensive and resourceful on the strategic and systematic avenues that this state’s traded on

to achieve socio-economic prowess and a self-sustaining economy (World Bank, 1993, pp. 8-15).

The question remains, what does the World Bank report tells us about the miracle of East Asia in

dominating the economy? What extra did this region incorporate in their social, political and

economic prospect to emerge the best in the region? Looking from a general perspective, it is

easy to realize that a fundamental element of growth ranges from natural to human resources,

capital, and technology employed in making the process of economic stability a success. East

Asia has a huge accumulation of human and physical capital. Equally, these economies were able

to allocate and manage human and physical resources to investments that seemed highly

productive with a compliment from a good grasp and mastery of technology and the dynamics of

the market. Arguing from this front then, it is easy to deduce that, the East Asian Economies did

not do any miracles in the quest to achieve its conquest; it just employed this essential of growth

and managed it better as compared to most other economies that had similar abilities and the

same time (World Bank, 1993, pp. 16-20). The economies studied on the report employed

distinct but highly combined policies ranging from hands off to interventionist explaining why

some claims that there is no a single model from the East Asian economy by their own that

essentially contributed to their development. Going as per the diversity prospect and experience,

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for a policy to be effective, it has to be country-specific and directly oriented to a specific reason

or task. The authors concluded that, the success of each economy was not necessarily from the

said parameters but from the primary application of combined market-friendly economic policies

which seemingly were common and effectual in facilitating the accumulation and eventual

allocation of economic resources. The authors, however, argue that, success in North East Asia,

for example, was made possible because of selective interventions with three major prerequisites.

Firstly, they were able to address problems in their functioning market with immediate effect.

Secondly, they were in a position to take sides of fundamentally good policies. Thirdly is the

government intervention of policies controlling the region economy with the establishment of

credible economic-performance criteria. Though the report elaborates on intrinsically and

extrinsically influential factors of economic prowess in these countries, it fails to answer various

questions on the same as well. Contest-based interventions, for example, have not been explained

in either setting with factors important to the growth of the economy such as culture, history, and

politics being left behind in the compilation of the report. The relationship between

institutionally demanding elements and the noneconomic factors of economic development has

not been completely answered here leaving a room for doubt on the credibility of the report

(World Bank, 1993, pp. 21-24).

Essence of the miracle

The HPAEs economies have been enjoying elements that greatly have contributed to the success

of their economy. The rich natural resources, a diverse culture, high population and favorable

economic policies are of great impact to this prospect. The region boosts of most of the best

skilled human personnel and state of the art technology and structures that have been used over

the years to bring about the success of the regional trade. Skilled and semi-skilled labor is highly

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available in the region. Basing the argument form historic records, it is easy to realize that the

region had a sustainable economy which could have been inherited to affect the current

economic stability they enjoy today. In 1960 and 1990, the region commanded a great economy

both in the physical and human capital that elementary lead to partnership and benchmarking

with other neighboring countries over the excellent economy (World Bank, 1993, pp. 25-26).

The HPAEs have a big difference from the developing countries within and outside the region.

Firstly, their rate of investment is very high ranging from industries, factories, and companies.

This exceeded 20% of the GDP in 1960-1990. A major reason of this factor can be attributed to

high level of skilled personnel from primary and secondary education equipping individuals with

skills that can be used to develop the economy in various fields such as medicine, business,

government, baking and other relevant scholarly related occupations. This is approximately two-

thirds of the success story of the economy while the rest can be attributed to improving

productivity in the region and the eventual sustenance of this trend in subsequent productions.

This can be related to high rate of industrialization and urbanization with eventual growth and

development of the investment sector such as companies and factories which absorb the educated

individuals to their workforce hence realizing a team of experts who eventually lead to effective

and reliable support to the growth of an organization.

Role of public policies to the economic growth of East Asia

Public policies played a big role in making the economic stability of this region a huge success.

It cannot be assumed that geographical location of the region and capitalism was the only factors

that helped in the miraculous economic prowess of HPAEs. The process of accumulating and

managing physical and human capital can as well be attributed to the implementation of public

policies that helped in controlling of trade and regulating investment in the region (World Bank,

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1993, pp. 79-80). Three major views have been used to explain this element. These are;

Neoclassical view, revisionist view, and the market-friendly view. The neoclassical view

explains that the legal framework and the excellent domestic macroeconomic that the HPAEs put

in place helped to promote international and domestic competition. This led to low price

distortions and fluctuating market reception with the fact that orientation of the HPAEs to

regional trade saw great improvement and eventual abolishment of price controls and distortion

of prices (World Bank, 1993, pp. 81-83). This was the great advantage to the sustainability and

development of economy due to stability in monetary systems and affiliated parameters.

The revisionist view argues that the success of the economic prowess in the region is not as a

result of neoclassical postulation. This is because interventions in financial markets and

industrial policies are not deeply explained with the articulation of the real-time endeavors in the

neoclassical view. Some of the argument here states that some policies are in accord with the

state-development process and not the postulates of any other view. The preposition of this view

is that neoclassical view presents the economic growth here as being from factors that are

standard set while from the look out, the factors that contributed to the economic stability and

sustainable growth are flexible and diverse contrary to the provisions above. Revisionist argues

that government led the market critically to the places of investment. There was no ultimate

direction of where the entrepreneurs could invest as neoclassical explains hence they felt in

unproductive markets. The government deliberately got the investors into wrong prices distorting

the incentive structures that could have helped the investors realize developmental investment in

their geographic region of operation (World Bank, 1993, pp. 84-86).

The market-friendly view, on the other hand, points out that the World Development Report of

1991 supports the neoclassical vie with the explanation of how systematical government activism

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had been able to effect continued changes in the world of economic prowess for HPAEs during

this period. The market-friendly view seems hugely in support of the neoclassical view

especially while addressing the role of government in devising and implementing polices that

can regulate the economy. Via this view, the government is seen to ensure adequacy in investing

in people ensuring the economy is open for regional and international trade, provision of a

competitive environment for public and private enterprises while at the same time maintain a

macro economy which forms the basis of the socio-economic establishment.

The functional approach of the economic stability can be linked to the discussed parameters and

the existence of developing the framework in three functional growth elements that are the art of

accumulation, the expertise inefficient allocation and the prompt technological catch up of the

HPAEs. If the three factors have been able to stimulate the growth of the economy, then the

argument of the three views can hold still though with varying differences on various postulates

in each view. Apparently, the fact that both physical and human factors have been incorporated

in the eventual growth of the economy in this context, it cannot then be assumed that the three

views are irrelevant. Though the government and individual contributions to the success of the

economy varies, implementation of the public policies to regulate and control the government is

the major reason as to why there was the success in sustainable growth of the HPAEs (World

Bank, 1993, 87-103).

Conclusion

From the context, it is clear that HPAEs economic stability is not as miraculous as most people

would argue. The fact that East Asia enjoyed massive economic stability since 1960 through to

1990s can be said to be part of the historical reason as to why their region enjoys a stable

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economy. The high GDP and fruitful investment in most productive regions is equally

elementary in enabling the growth of the economy. As the president of the Word Bank puts it, it

is not necessarily the efforts of the people that lead to the stable economy witnessed today but

the internal and external factors that were put in place by the cultural diversity, education,

political issues and development of the inherited structures to cultivate the economy to that of a

stable state. It can be concluded that East Asia HPAEs were able to implement and successfully

utilize their physical and human capital to stimulate their economic growth which responded

with much success with sustainability than any other country in the region. From this approach

then if other countries with similar opportunities and abilities as East Asia could have utilized

their resources as East Asia did, then the perception of a miraculous economic stability could not

be there since they could have achieved the same as these regions did.

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Work Cited

World Bank (1993). The East Asian Miracle. [online] New York: Oxford University Press, pp.1-

4. Available at: http://documents.worldbank.org/curated/en/975081468244550798/pdf/multi-

page.pdf [Accessed 25 Nov. 2017].

World Bank (1993). The East Asian Miracle. [online] New York: Oxford University Press, pp.5-

7. Available at: http://documents.worldbank.org/curated/en/975081468244550798/pdf/multi-

page.pdf [Accessed 25 Nov. 2017].

World Bank (1993). The East Asian Miracle. [online] New York: Oxford University Press, pp.8-

15. Available at: http://documents.worldbank.org/curated/en/975081468244550798/pdf/multi-

page.pdf [Accessed 25 Nov. 2017].