Did China Follow the East Asian Development Model

Topics: Economics, Macroeconomics, East Asia Pages: 32 (8990 words) Published: June 11, 2011
Did China follow the East Asian development model?
Andrea Boltho1 Maria Weber 2 3
China is located in East Asia and, just as Japan, Taiwan or (South) Korea at earlier stages of their development, has now grown very rapidly for some three decades. That is not enough, however, for it to qualify for membership of the club. The East Asian development model has a number of additional and important characteristics. Four are selected for discussion: the almost constant encouragement given to investment, the manufacturing sector and external competitiveness, and pursued via a variety of fairly interventionist industrial, trade and financial policies; a concomitant belief in the virtues of intense domestic (Japan and Taiwan) and foreign (Korea) competition; a set of broadly sensible and appropriate macroeconomic policies; and a number of favourable (pre-)conditions, such as the presence of a homogeneous population, a relatively high stock of human capital, reasonable income equality and fairly authoritarian governments. China, since reforms began in the late 1970s, has shared some of these characteristics, but not all. In particular, it is still much more of a command economy than the other three countries have ever been, yet, at the same time, has embraced globalization with, arguably, much greater enthusiasm than was done, in earlier times, by Japan, Taiwan or Korea. If China’s experience, however, is compared with that of other, more or less successful, developing countries, the similarities with the East Asia development model would seem to dwarf such differences.

JEL codes: N10, N15, O53, P52 Keywords: China, Growth, East Asia, Economic Policy

The exceptional economic history of countries such as Japan, Taiwan, (South) Korea and the city-states of Hong Kong and Singapore, has often been put forward as exemplifying a unique and extremely successful East Asian model of development. In one very simple sense China is obviously part of this experience if only because it is also located in East Asia and its growth since the late 1970s has been just as rapid as that of its neighbours. This is shown in Chart 1 which plots the level of China’s GDP per capita at purchasing power parity (PPP) over the 25 years that go from 1980 (just after the beginning of reforms) to 2005 and compares it with similar data for Japan (over the period 1950-75), Taiwan (1960-85) and Korea (1965-90). The particular time-spans chosen are the quarter centuries (beginning or ending with round figures) that have exhibited the fastest growth rates in each of the four countries respectively. They also happen to more or less overlap with what the literature would consider as having been the periods of successful economic take off in the three countries. Hong Kong and Singapore are not being considered in what follows given that their limited size makes comparisons with China even more hazardous than with, say, Korea or Taiwan. Geography and rapid growth may be necessary conditions for admittance to the “East Asian club”, but they are clearly not sufficient ones. A number of other important economic, institutional and social features have been selected in the literature as crucial Magdalen College, University of Oxford Università Bocconi, Milano 3 Maria Weber sadly passed away in the early stages of the preparation of this paper. Useful, and in no way incriminating, comments on an earlier draft were provided by Klaus Wegner, participants at Conferences at Bocconi and Perugia universities and two anonymous referees. 1 2

Available online at http://eaces.liuc.it

EJCE, vol. 6, n. 2 (2009)

to the East Asian model of development and, arguably, China may not have shared in all, or even any, of these. The following will first briefly sketch what these features may have been. The second and third sections will then look at similarities and differences between China’s experience and that of the other three East Asian countries...

Bibliography: EJCE, vol. 6, n. 2 (2009)
Maddison A
Table 1: Macroeconomic Policy and Inflation
General government net lending (in % of GDP) Japan (1950-70) Taiwan (1960-85) Korea (1965-90) China (1980-2005) 0.4 2.0 1.5 1.1
Table 2. Educational Attainments
GDP per capitaa Japan (1950) Taiwan (1960) Korea (1965) China (1980) Memorandum items (1970): Latin America MiddleEast & N
EJCE, vol. 6, n. 2 (2009)
Table 3
East Asia Japan (1950-75) Taiwan (1960-85) Korea (1965-90) China (1980-2005) 7.4 7.0 7.5 7.0
Others Turkey (1950-75) Brazil (1955-80) Mexico (1955-80) India (1980-2005) 3.6 4.1 3.4 3.9
Sources: Groningen Growth and Development Centre Database; Maddison (2003).
Korea (1965-90)
Japan (1950-75)
Taiwan (1960-85)
China (1980-2005)
100 : Sources Groningen Growth and Development Centre Database; Maddison (2003).
China (1980-2005)
China (1980-2005)
Taiw an (1960-85)
Japan (1950-75)
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