Common factors lead to East Asia's economic growth

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)