BUS272 Changing Economies of
Introduction to the East Asian Growth Miracle
(C ha pter 1 : E co nomic D ev elopment in A sia )
(Suppl em ent Versi on – Lee Lao Shi )
East Asian growth: miracle or myth?
Focus on the Newly Industrialising Economies (NIEs):
Hong Kong, Singapore, South Korea, Taiwan
Other key economies: India, Indonesia, Malaysia,
People's Republic of China (PRC), Thailand
Characteristics of economic growth
Miracle:some phenomena or occurrences cannot be explained scientifically by causal relationship.
Myth: some accepted beliefs or stories that may not necessitate scientific explanation.
What is modern economic growth?
It involves a sustained increase in real per capita product, accompanied by an increase in population and
significant structural changes
(Key d efinition here. Do remember it.)
Sustainable growth o ver some period: so what co nstitute dri ving factors o f sustai nability ? We will discuss these dri ving fo rces by stud ying two articles: a: The M yth of Asia M iracle; b. The East Asian M iracle – Economy Gro wth & P o licy
In flatio n protected, thus growth in purchasing power per person . Sustain able gro wth needs to be viewed in the light of this persisten t an d co ntinual growth of real per capital in come, where briefly it is measured by : Real (inflation d iscounted) GDP / Number of P eople.
P o pulatio n gro wth as well: average age d ecreases, thus supply o f future youn g v ibrant wo rkfo rce. W itho ut population growth, labor force, which is on e of the four productio n factors, will decline in the lo ng term and that will disrupt the sustainability of growth,
Structural change: change o f allocation of resources and intuitions reform
Tak e n ote that “Growth” and “Development” are not the same. G row th : relate in a n arrow man ner fro m measure of GDP and its derived indicators only Devel opm en t: a broader and holistic perspective that apart GDP , also includes measures of HDI, Healthy Life Expectancy, Green GNP . Thus Dev elopmen t is what an economy sho uld aim for, not just gro wth.
Structural change can have a narrow or wide
Narrow meaning- refers to the allocation of
resources (capital and labour) between primary,
secondary and tertiary industries
A key factor shaping a country’s economic
performance is its ability and willingness to
transfer resources from areas of declining returns
to areas of increasing returns
Thus, with same level of resources or inputs, output volume for an economy increases. This is growth.
When Output / Input (or output per unit of input) increases, we say that growth has taken place. Different sectors of an economy experience different rates of growth. Those sectors with low (or negative) growth, their resources, such as labor and capital, will be re-channelled to other high growth sectors.
Wide meaning- refers to the changing institutional features
of the economy or to the forms of economic organisation
“Institutions are rules of human interaction that constrain possibly oppurtunistic and erratic individual behaviour, thereby making human behaviour more predictable and thus facilitating the division of labour and wealth creation.” (W. Kasper and M. Streit)
Both types of structural change are crucial to understanding the long run growth performance of economies
(Generally, institutions mainly take the forms of administrative government, judiciary system, law and order, economic and financial system, political system, and custom and culture. Some forms of institutions are designed while other evolved. For designed, policy and other deliberate means can bring about structural change effectively; while for evolved institutions, structural change usually take effect at a less immediate manner and less obvious.)
Definition of an NIE
Savings ratio at least 15 per cent...
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