Asian Miracles, or Not?

J.D. Han

“Asian Miracles” by World Bank

• The first official report started in 1993.

• The full report can be found at http://www-wds.worldbank.org/external/default/main?pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&theSitePK=523679&entityID=000009265_3970716142516&searchMenuPK=64187283&theSitePK=523679

• The High Performing Asian Economies (HPAEs) : Japan, Hong Kong, the Republic of Korea, Singapore, Taiwan, Indonesia, Malaysia, and Thailand.

• It finds that the diversity of experience, the variety of institutions, and the variations in policies among the HPAEs does not allow a model to be developed.

• However, some lessons for other developing countries can be learned from the East Asian experience.

• First, growth is not Automatic: HAPEs use a variety of government intervention or policies to achieve three functions of growth - accumulation, allocation, and productivity growth.

• Second, it is essential to get the fundamentals right. 1) High levels of domestic saving, 2) good macroeconomic management, and 3) broad based human capital.

• Third, the government intervention should have specific orientations, such as limited price(market economy) distortions.

1. Fact

• Rapid Growth in HPAE’s

• (Recent) High Growth of China

2. Stylized Facts of East Asian Countries

There are many features.

3. Analysis

What caused such a high growth? In its explanation, the World Bank report is1) Neo-Classical Theory(K, L, and Technolog

y) plus

2) Endogenous Growth Theory (On Human Capital; Social Capital; and Government Policies)

In particular, Word Bank attributed the Asian Miracles to1) Accumulation of Physical Capital

(Savings); 2) Fostering Human Capital (Education); 3) Social Capital (Harmony-not

confrontation, Law and Order, Lack of Corruption);

4) Sound Government Policies (Industrial Policy, Export Promotion, etc.)

*Slightly ambivalent about Technology(?).

5) The composition of Capitals is important:

-World Bank report classifies K into at least 4 (Physical; Natural; Human; Social)

West Africa: Natural Capital is relatively large, but Human Capital is relatively small

East Asia: Human Capital is relatively large and Natural Capital is relatively small

• World Bank report comes up with a new measure of Capital Accumulation conducive for Economic Growth:

• “Genuine Saving Rate”

Human Capital is fostered through Education;

Pioneer of research by Gary Becker

4. Focusing on Education

Public Expenditure on Education is misleading: It is not High in Asia

However, we should include Private Expenditures on Education

1) Private Spending on Education is large in East Asia

• Juku (Japan)• Hank-Won or Ga-Wai (Korea)• Buxi(China)2) East Asia is the major source of International Migration f

or Education: Largest groups of International Students in English Speakin

g Countries are from East Asia* Refer to Paper by Han and Ibbott(2005).

* Reflect on Education in East Asian History

• Neo-Confucian Concept of Social Class

• Social Class Structure

• Social Mobility and Education

Click here for an interesting paper on the social mobility of China

Education is worth investment only when it helps social mobility.

Encyclopaedia Britannica says

• Ch’ing dynasty Social mobility increased during the early Ch'ing, supported by a pervasive belief that i

t was possible for a peasant boy to become the first scholar in the land. An ethic that stressed education and hard work motivated many households to invest their surplus in the arduous preparation of sons for the civil service examinations. Although the most prestigious career in Ch'ing society remained...

• Ming dynasty ...the Ming civil service, that influential families did not monopolize or dominate the ser

vice, and that men regularly rose from obscurity to posts of great esteem and power on the basis of merit. Social mobility, as reflected in the Ming civil service, was very possibly greater than in Sung times and was clearly greater than in the succeeding Ch'ing era.

• T’ang dynasty ...examination system had facilitated the recruitment into the higher ranks of the burea

ucracy of persons from lesser aristocratic families, most officials continued to come from the established elite. Social mobility increased after the An Lu-shan rebellion: provincial governments emerged, their staffs in many cases recruited from soldiers of very lowly social origins, and specialized finance...

** Contemporary China• X.Wu, Institutional structures and social mobility in China: 1949-1996

Научный руководитель, edited by D.J.Treiman, 2001

• Results show that (1)receiving education or obtaining political credentials are two major channels for individuals to achieve upward social mobility in the hierarchical status system of socialist China; (2)there exist high rates of inter-generational inheritance in terms of status as defined in the Chinese institutional context; (3)although one can overcome disadvantages in family background by acquiring educational and political credentials, access to these two fundamental currencies of mobility is highly constrained by one's hukou origin and first work unit affiliation. The analysis reveals an intertwined relationship among hukou status, work unit status, and employment status. The temporal trend of social mobility, especially the impact of economic reform, is also addressed. Economic reform, especially during its late stage, has yielded limited consequences for the Chinese stratification system. The research contributes to understanding of how the Communist party-state controlled and allocated life chances and status, which in Western societies is allocated mainly through competition in labor markets.

• What does this mean?

• Fully paper is at http://72.14.205.104/search?q=cache:bSx1y9NxpFoJ:www.ecsocman.edu.ru/db/msg/24362.html+social+mobility+in+china&hl=en&ct=clnk&cd=7

• It has been changing: The number of Chinese students going overseas is increasing, reflecting the Chinese education boom.

5. Focusing on Social Capital

• Still we have to grasp the concept of Social Capital in the East Asia -> We have to study the East Asian Social Institutions such as Society, Government, and Enterprises. They should include Value System, Organizations, Polices, and Management Styles.