Chapter 7: Problem 9

Describe the strategy that East Asia used from the 1970 s to the 1990 s to achieve high rates of economic growth. Can the Asian miracle continue in the new millennium?

Short Answer

Expert verified

The 'Asian Miracle' was primarily driven by an export-oriented economic strategy, emphasis on education, high saving and investment rates, and the government's active role in industrialization. The new millennium will necessitate adjustments such as transitioning to a digital and service-oriented economy. However, the core principles remain importantly applicable.

Step by step solution

Identification of the Strategy

The East Asian economies, particularly the four Asian tigers - Hong Kong, Singapore, South Korea, and Taiwan, utilized an export-oriented economic model. This model placed a high emphasis on education, high savings and investment rates, and the active role of government in subsidizing industries in areas consistent with economic plans.

Key Factors Behind the Strategy

Several factors contributed to the success of this strategy. The governments of these countries actively facilitated industrialization by providing infrastructure, access to capital, and ensuring a stable macroeconomic environment. Also, their heavy investment in human capital improvement through education and training was pivotal.

Analysis of its Continuance in the New Millennium

The feasibility of continuing this strategy in the new millennium is contingent on various factors. East Asian countries should adapt to changing global conditions such as the rise of digital economy and service-oriented economy. However, the core principles of high investment in human capital and infrastructure, and a balance between free markets and strategic government intervention remain applicable.

Conclusion

While some aspects of the 'Asian miracle' may need to evolve to fit changing global conditions, several of its central tenets such as prioritizing education and maintaining a stable macroeconomic environment still hold valuable lessons for emerging economies in the new millennium.

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!