Common factors lead to East Asia's economic growth
JAKARTA (JP): A set of common fundamentals has powered East Asia's tremendous economic growth over the past three decades despite the wide range of specific institutions and policies in each country.
This regional success has been reinforced by the "contagious effects" of rapid progress and successful policies, which help each economy achieve more than would be possible in a less dynamic setting, American professor Peter Petri, told the Third Biennial Conference of Asian Correspondent Institutes yesterday.
Petri is director of the Lemberg Program in International Economics and Finance at Brandeis University in Massachusetts, the United States.
Petri explained that neoclassical, structural and cultural theories have emerged explaining the East Asian "miracle" economies -- China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. The average of economic growth for these nations reached 7.5 percent in the period from 1960 to 1973 and 6.5 percent in the 1973 to 1987 period.
Among the common fundamentals that contributed to East Asia's "miracle" growth were outward orientation to build strong links with world markets and technology, and macroeconomic discipline which created a stable, predictable environment for investment and trade.
Another common characteristic, according to Petri, was that the newly industrialized economies (NIEs) also invested vigorously in human capital and maintained competitive markets to facilitate the transformation from primary production to manufacturing and eventually to knowledge-intensive industries.
He added that the NIEs' economic expansion also depended on state intervention to direct economic activity toward greater investment with selective trade restrictions and preferential access to credit and important input.
Bureaucracies
The economist also observed that the NIEs created elite, autonomous bureaucracies which could design and implement sectoral policies without becoming the tool of special interests. They also targeted sectors that offered strong opportunities for growth and productivity.
He said the governments of NIEs avoided policy mistakes by limiting the duration of government support and by setting performance-oriented criteria, such as export success, for promoted firms.
The four-day biennial conference, which was opened by Minister of Trade Satrio Budiardjo Joedono, is sponsored by the San Francisco-based International Center for Economic Growth (ICEG) in association with the Center for Strategic and International Studies (CSIS) in Jakarta.
ICEG is a non-profit international policy program which was founded in 1985 to promote economic growth and human development in developing and post-socialist countries. It has 68 institutes in 24 countries in Near East Asia.
According to ICEG General Director Nicolas Ardito-Barletta, the conference is attended by 16 institutes from Asia, 10 from the Middle East and a group of African institutes.
Speakers in the conference include former Asian ministers and policy makers, such as the former Korean minister of finance, Il Sakong; former governor of the Central Bank of India, A.N. Malhotra; former Indonesian minister of energy and manpower, Mohammad Sadli; an executive of the Association of African Central Banks, Jean Marie Gankou, and an official of the Kenya Export Processing Zones Authority, Silas Ida.
Among topics discussed at the conference are the future of the Asia Pacific Economic Cooperation (APEC), factors underlying the Asian "miracle" and environmental problems related to Asian economic growth. (10)