Lecture 2 ECON456/556 8 July 2013

 The focus of analysis is the period from 1960s-1980s where these countries rapidly transformed from poor to high income economies. and  Institutional set-up.  NIC definition.  Geography and history .  Socio-economic performance (comparative statistics).A framework for analysis.  Conclusion 2 .  Background of NICs. Recap .

outcomes and experience”  Theories  An understanding of economic development theories are crucial in understanding these economic  Factors & metrics for analysis  Focus on indicators that measure economic change and policies that facilitated the economic change. and  “Industrialisation patterns. process. 3 . One (long) sentence explanation (See lecture 1-a):  Core areas of analysis:  “Economic and social transformation” .

In fact these factors are the ‘deeper determinants” of economic growth. history and institutions are also important to provide the context. but not the focus of this unit  While focusing on the economics. history and institutions  These are important. an understanding of the geography. Geography.  Read this article by Bloch & Tang to understand the role of geography and institutions in economic growth [Note: These two short articles [LINK HERE and HERE] captures the big debates on a very big question – what determines economic growth?] 4 .

 NICs/NIEs – No agreed definition. The Newly Industrialising Economies of East Asia. 5 . rapid structural change. and after.  A dynamic view: see the emergence of NIEs Main reference: Chowdhury & Islam (1993). Routledge.  Essentially to capture countries that have achieved high levels of economic growth over a sustained period and concurrently.  A comparative-static view : a historical event which differentiates  A concept developed to capture two phenomenon: industrialisation experience before WWII.

Next three slides illustrate NICs economic growth achievements. and with other countries. technological advancement)  Rapid poverty reduction.  Rapid structural change (contribution of sectors to GDP.Unprecedented socio-economic achievements based not on natural resources but on industrial production. employment . and  Improvements in individual choice.  Rapid economic growth – in comparison with past trends. 6 .

Rapid economic growth in comparison to other economic regions 7 .

1950 1952 1954 Hong Kong 1956 1958 1960 1962 1964 Japan 1966 1968 1970 1972 Korea (RoK) 1974 1976 1978 1980 1982 Singapore 1984 1986 1988 1990 1992 Taiwan 1994 1996 Penn World Table 1998 Australia 8 2000 2002 2004 2006 2008 2010 . and continues to grow. at 2005 constant prices 60000 55862 50000 41114 40000 32105 30000 26609 20000 13081 10000 4383 0 Rapid catch-up and achieved high levels of average income per capita.PPP Converted GDP Per Capita (Chain Series). Note: Australia used as a benchmark.

Republic of Graduated into high income economies in mid 1980s-1990s 9 .35000 30000 25000 20000 RGDPch 15000 10000 5000 0 1985 United States Singapore Japan Australia 1990 Hong Kong United Kingdom Taiwan 1995 Korea.

some mixed. way is to follow Lall & Teubal (1998): functional.  Industrial policies can be classified in several ways. One useful  There are several views on the effectiveness of these industrial polices as they are practised in the NICs (some positive. export oriented & mixed (see next slide for a flavour) to drive economic growth.).  How did they do it:  NICs used a mix of industrial policies in two different industrialisation strategy . vertical & horizontal. others negative. 10 . The first tier NICs transformed from poor/rural/backward countries in the 1950s to rich/urban/modern countries in the late 1980s/ early 1990s.import-substitution.

2013 11 .Broad sketch of Industrial Strategies & Policies of Selected NICs JICA.

it is important to get a sense of the physical geography. mountainous. minerals and fossil fuel. markets? – is it landlocked. To give context to the economic change. –  Natural endowments: fertile agriculture land. archipelago.  Climatic conditions: suitable for human living. agriculture.  Key questions:  Physical geography of the country  Connectivity : accessibility to trade routes. etc. etc. the geo-political issues. disease burden NOTE: A brief knowledge of these factors to provide context to the economic factors is sufficient for this unit. and the historical context . 12 . island.

etc. feudal?. enemies?)  What are there spheres of influence ?  History (or initial conditions)  Society : (diverse?. Geo-political  Who are the immediate neighbours (friends.)  Independent or colonised?  What happened post WWII? 13 .

Consider the geographical questions 14 .

Lewis. Wyckoff (2008) 15 .Consider the geographical questions Source: Rowntree. Price.

 What is the political set-up of these economies (1960s-1980s)?  How were the leadership of these countries perceived by the local and international community? connected? society?  How were the political system and economic system  What was the relationship between state (the government) and 16 .

. Nagoya University Press.Authoritarian Developmentalism in East Asia 1945 50 55 60 60 61 65 70 75 80 79 85 90 95 97 2000 Korea Taiwan 46 48 Rhee Syngman 49 Park Chung-hee 75 78 87 88 92 Noh TaeChun Doo-hwan woo 88 Kim Dae-jung Chen Shuibian Kim Young-sam Nationalist Party 53 57 61 Chiang Kai-shek 65 Chiang Ching-kuo 86 Lee Teng-hui 92 98 Philippines Indonesia Singapore Malaysia Quirino Skarno 55 Garcia Magsaysay Macapagal Marcos Suharto Aquino Ramos Estrada 99 Wahid 90 59 65 Habibie Labor Party 57 People's Action Party 70 Lee Kuan-yew 76 81 Goh Chok-tong Mahathir UMNO / Rahman 46 48 57 58 63 Razak 73 75 Hussein 77 80 88 91 97 Thailand Vietnam Myanmar Phibun 51 Indochina Communist Party Sarit Thanom 76 Prem Kriangsak Chatichai Chuan Labor Party 62 Vietnamese Communist Party 88 48 U Nu Burma Socialist Programme Party / Ne Win SLORC 17 Source: Akira Suehiro. 2000. Catch-up Type Industrialization . p115.

It is data intensive and provides excellent documentation on the strategies and policies that the NICs took. Routledge. 18 . This lecture presentation provides a guide on how to understand & analyse economic and social transformation in the NICs. 6. compare and contrast) any economic unit (either a country or a region). The Newly Industrialising Economies of East Asia. the other key readings are:  Tipton (1998): Chapters 3. 4. 9.  Other than the hyperlinked readings in the PowerPoint. This is an excellent book to understand the mechanics of the transition. The framework presented can be used to analyse (evaluate. Chapters 1 to 12. 10 and 12 [Read sections relating to the NIC countries]  Chowdhury & Islam (1993).

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