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Asian Transformations
OUP CORRECTED PROOF – FINAL, 05/08/19, SPi
Asian Transformations
An Inquiry into the Development
of Nations
Edited by
D E E PA K NAY YA R
1
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1
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
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It furthers the University’s objective of excellence in research, scholarship,
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© United Nations University World Institute for Development
Economics Research (UNU-WIDER) 2019
World Institute for Development Economics Research of the United Nations University (UNU-WIDER),
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OUP CORRECTED PROOF – FINAL, 05/08/19, SPi
Foreword
Gunnar Myrdal published his magnum opus Asian Drama: An Inquiry into the
Poverty of Nations in 1968. Described by one of his peers as a cheerful pessimist,
Myrdal was deeply negative about Asia’s development prospects and this
pessimism was manifestly evident across the pages of his tome. However, the
half-century since publication has witnessed a most remarkable social and
economic transformation in Asia that would have been difficult for Myrdal to
imagine, let alone predict, at the time of his writing.
During discussions with Deepak Nayyar—a former Chair of the UNU-WIDER
Advisory Board—he proposed an in-depth inquiry into the how and why of the
dramatic transformations within Asia since Myrdal’s major work, looking at how
nations can develop across time given their different national characteristics,
political settlements, natural endowments, and starting points of development.
As it turned out, that conversation pre-launched the UNU-WIDER research pro-
ject, Asian Transformations—An Inquiry into the Development of Nations. The
project maps and analyses the story of progress and economic development in
Asia, with the region’s transformed significance in the world economy, and
reflects on what future decades might hold.
This book, with its comprehensive chapters by eminent economists and social
scientists, is the distillation of the entire academic project, making it essential
reading for economists, policymakers, and scholars and students of development.
Valuable lessons can be drawn from the research—successes, failures, or mixed
outcomes—that will help in thinking about the economic prospects of countries,
whether leaders or laggards at the point of departure.
I sincerely thank the contributors for their studies, which share with us their
individual expertise, and particularly Deepak Nayyar for bringing this very rich
academic inquiry to full fruition.
UNU-WIDER gratefully acknowledges the support and financial contributions
to its research programme by the governments of Finland, Sweden, in this case
particularly the Swedish International Development Cooperation Agency—Sida,
and the United Kingdom. Without this vital funding our research and policy
analysis work would be impossible.
Finn Tarp
Director, UNU-WIDER
Helsinki, December 2018
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Preface
viii Preface
and the editor. Selected aspects and highlights of the study were also presented at
a plenary session of the WIDER Annual Conference in mid-September 2018,
which was followed by a helpful discussion. I would also like to record my appre-
ciation of the work done by referees, who reviewed draft papers at different stages.
Their evaluation and comments helped improve the quality of the volume. Above
all, I am grateful to the contributors for their patience, understanding, and effort
in putting up with my demands for successive rounds of revisions.
This book, and its companion volume, Resurgent Asia: Diversity in Development,
are the outcome of the UNU-WIDER research project Asian Transformations.
I am indebted to Finn Tarp for his acceptance of the idea and his commitment to
what seemed an exceedingly difficult task at the time. Somewhat late in the lifecycle
of the project, I also persuaded him to write a chapter on Vietnam for the volume.
In the journey to completion, the unstinted support from Finn Tarp was invaluable.
I owe a special word of thanks to the staff at UNU-WIDER in Helsinki, who
lent wonderful support throughout over two years even though I lived in faraway
New Delhi. Tony Addison, with his perceptive and interesting ideas, was a lively
participant and discussant at all our meetings and workshops. Paul Silfvenius
provided us with quiet, efficient, administrative support. Janis Vehmaan-Kreula,
the project secretary, our anchor in Helsinki, was a pillar of support, with tireless
effort and complete dedication, for me and for all the contributors spread across
the globe. Lorraine Telfer-Taivainen, super efficient at whatever she does, helped us
at the Shanghai workshop, and, most importantly, prepared the final manuscript
for publication. The authors alone know how hard she worked.
It is difficult for me to find the words to thank Rajeev Malhotra, who worked as
my principal assistant on the project with a strong commitment that is worthy of
praise. He was conscientious, meticulous, and efficient. It was multi-tasking in
every sense of the word. He helped in preparing for our author workshops, mak-
ing presentations for authors who were unable to come, acting as a discussant, or
summing up sessions, and then assisting with follow-up. And he was a careful
reader of papers. In fact, Rajeev provided valuable assistance whenever, and in
whatever form, it was needed. It was gracious of him to find the time for these
tasks, given his own academic obligations—I owe him a debt of gratitude.
The object of this book is to analyse the development experience of Asia over
the past five decades. There is no such study yet. And this is new. It should, at the
same time, contribute to our understanding of the process of development. There
are, perhaps, lessons that can be drawn from the Asian experience—successes,
mixed outcomes, failures—which might help in thinking about economic pros-
pects of countries in Asia and elsewhere that are latecomers to, or laggards in,
development. In this half-century, the world has witnessed profound changes in
economic development, social progress, and living standards. And, contrary to
Myrdal’s expectations, Asia has been transformed beyond recognition. These
transformations have been uneven across countries and unequal among people.
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Preface ix
Yet, Asia’s remarkable development over the past fifty years has also transformed
its significance in the world economy. Thus, how the future unfolds in Asia over
the next twenty-five years will have important implications for the world. Given the
enormous diversity and massive size of Asia as a continent, this study is obviously
an ambitious endeavour. It should come as no surprise that there are unexplored
themes, unsettled issues, and unanswered questions. Even so, it is hoped that this
book will contribute to our understanding of, and stimulate further thinking on,
the subject.
Deepak Nayyar
New Delhi
December 2018
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Table of Contents
PA RT I SE T T I N G T H E S TAG E
PA RT I I C R O S S - C O U N T RY T H E M AT IC S T U D I E S
PA RT I I I C O U N T RY A N D SU B - R E G IO N S T U D I E S
Country Studies
Sub-Region Studies
Index557
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List of Figures
List of Tables
List of Abbreviations
Notes on Contributors
Kaushik Basu is a professor of economics and Carl Marks Professor of International Studies
at Cornell University, Ithaca and New York. He was formerly Chief Economist of the World
Bank in Washington. He has published widely in the fields of development economics,
game theory, industrial organization, and law and economics. His most recent book is The
Republic of Beliefs: A New Approach to Law and Economics (Princeton University Press 2018).
Amit Bhaduri is professor emeritus at Jawaharlal Nehru University (JNU), New Delhi. His
areas of specialization are macroeconomics and development economics, both aided by
appropriate mathematical modelling. He has published widely in these areas.
Ha-Joon Chang teaches economics and is the Director of the Centre of Development
Studies at the University of Cambridge. He has published widely on the role of the state,
trade and industrial policy, and institutions. By 2018, his writings will have been translated
in forty-one languages and forty-four countries. Worldwide, his books have sold around
two million copies. He is the winner of the 2003 Gunnar Myrdal Prize and the 2005 Wassily
Leontief Prize.
Prasenjit Duara is the Oscar Tang Chair of East Asian Studies at Duke University. He
received his PhD in Chinese history from Harvard University. He was Professor of History
and East Asian Studies at University of Chicago (1991–2008) and Raffles Professor and
Director of Asia Research Institute at the National University of Singapore (2008–2015).
His latest book is The Crisis of Global Modernity: Asian Traditions and a Sustainable Future
(Cambridge 2014). He was awarded an Honorary Doctorate from the University of Oslo in
September 2017.
Ronald Findlay studied at Rangoon University, BA 1954, and MIT, PhD 1960. He taught at
Rangoon University during 1954–1957 and again in 1960–1968, and Columbia University
during 1969–2014, retiring in 2014 as the Ragnar Nurkse Professor Emeritus of Economics.
His fields of interest have been the theory of international trade, economic development,
political economy, and the history of the world economy.
Patrick Heller is the Lyn Crost Professor of Social Sciences and professor of sociology and
international studies at Brown University. His main area of research is the comparative
study of social inequality and democratic deepening. He is the author of The Labor of
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Development: Workers in the Transformation of Capitalism in Kerala, India (Cornell 1999) and
co-author of Social Democracy and the Global Periphery (Cambridge 2006), Bootstrapping
Democracy: Transforming Local Governance and Civil Society in Brazil (Stanford 2011) and
most recently, Deliberation and Development: Rethinking the Role of Voice and Collective
Action in Unequal Societies (World Bank 2015).
Ravi Kanbur is T.H. Lee Professor of World Affairs, International Professor of Applied
Economics and Management and Professor of Economics at Cornell University. He is Chair
of the Board of United Nations University World Institute for Development Economics
Research—UNU-WIDER, Co-Chair of the Scientific Council of the International Panel on
Social Progress, member of the OECD High-Level Expert Group on the Measurement of
Economic Performance, past-President of the Society for the Study of Economic Inequality,
past-President of the Human Development and Capabilities Association, past member of
the High-Level Advisory Council of the Climate Justice Dialogue, and past-member of the
Core Group of the Commission on Global Poverty.
Justin Lin Yifu is Dean of Institute of New Structural Economics, and Institute of South–
South Cooperation and Development, Peking University. He was the Senior Vice President
and Chief Economist of the World Bank, 2008–2012. He has published more than thirty
books on development, Chinese economy and agriculture. He is a Corresponding Fellow of
the British Academy, and a Fellow of the Academy of Sciences for Developing World.
Manuel F. Montes is Senior Advisor on Finance and Development at the South Centre,
Geneva. He was previously chief of the development strategies branch at the UN Department
of Economic and Social Affairs, and an associate professor of economics at the University
of the Philippines. His publications have been in the areas of development macroeconomics
and finance, on industrial development, and on systemic issues.
Sudipto Mundle is Emeritus Professor at the National Institute of Public Finance and
Policy. He spent much of his career at the Asian Development Bank, from where he retired
as a Director in the Strategy and Policy Department. He has served on the faculty of sev-
eral research institutions and was also an economic advisor in India’s Ministry of Finance.
His main research interests include development economics, macroeconomic modelling,
fiscal and monetary policy and governance. He has published several books and papers in
professional journals in these fields.
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C. Peter Timmer is an authority on agricultural development, food security, and the world
rice economy, and has published scores of papers and books on these topics. He has served
as a professor at Stanford, Cornell, three faculties at Harvard, and the University of
California, San Diego. He is currently the Cabot Professor of Development Studies, emeritus,
at Harvard University. In 2012 he was awarded the Leontief Prize for advances in economic
thought, and in 2014 delivered the 18th Annual WIDER Lecture at the UN in New York.
Rolph van der Hoeven is Professor Emeritus, Employment and Development Economics
at the International Institute of Social Studies (ISS), Erasmus University (EUR), The
Hague. He is also member of the Committee on Development Cooperation of the
International Advisory Council (AIV) of the Dutch Government and of several other
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Dutch development organizations. Earlier he was Director Policy Coherence and Manager
of the Technical Secretariat of the World Commission on the Social Dimension of
Globalization at ILO Geneva. Other positions included Chief Economist of UNICEF in
New York and policy analyst for the ILO in Ethiopia and Zambia. He is widely published
in the area of employment, inequality, globalization, and global governance.
Rob Vos is Director of Markets, Trade and Institutions at the International Food Policy
Research Institute (IFPRI). He is also Professor of Finance and Development at the
International Institute of Social Studies, The Hague. Previously, he has held positions at
the Food and Agriculture Organization (FAO) as Director of Agricultural Development
Economics and at the United Nations as Director of Development Policy Analysis. He has
published widely on issues of international trade and finance, poverty, sustainable devel-
opment, and food security.
Robert H. Wade is a professor of global political economy at the London School of
Economics. He is the author of Irrigation and Agricultural Politics in South Korea (Westview
Press 1982); Village Republics: Economic Conditions for Collective Action in South India
(Westview Press 1989); and Governing the Market: Economic Theory and the Role of
Government in East Asian Industrialization (Princeton University Press 2004). The latter
was awarded Best Book or Article in Political Economy Prize from the American Political
Science Association. He was awarded the Leontief Prize in Economics in 2008.
Guanghua Wan is Director and Professor, Institute of World Economy, Fudan University.
Previously, he was Research Director and Head of Poverty and Inequality Group, Asian
Development Bank. Prior to ADB, he was a senior economist in the United Nations and has
taught in a number of Universities in Australia and China. Trained in development eco-
nomics and econometrics, he is a multi-award-winning scholar on the Chinese economy
and an expert on Asia, with a publication record of more than 100 professional articles and
a dozen or so books, including two by Oxford University Press. He is an honorary professor
of over ten top institutions in China.
Chen Wang is an associate professor at the Institute of Finance and Economics, Shanghai
University of Finance and Economics, and a research fellow at the Department of Economics
of Leiden University. Her research interests include income inequality, poverty, consump-
tion, and economics of aging. She has published papers in refereed journals, such as Journal
of Economic Surveys, Cambridge Journal of Economics, Journal of Social Policy, Social
Indicators Research, The World Economy, China Economic Review, and International Journal
of Social Welfare.
Kiryl Zach is a PhD candidate in the Centre of Development Studies, University of
Cambridge. His main research interest is the study of industrial policy of Poland. He is
investigating changes and continuities of various policy strategies, principles and driving
motives for industrialization in the three seemingly altogether separate periods—inter-war
period, post-Second World War communism, and the post-1989 neo-liberal turn.
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PART I
SET T ING T HE STAG E
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1
Rethinking Asian Drama
Fifty Years Later
Deepak Nayyar
1. Introduction
Gunnar Myrdal published his magnum opus, Asian Drama: An Inquiry into the
Poverty of Nations, in 1968. The fifty years since then have witnessed a remarkable
economic transformation in Asia—even if it has been uneven across countries
and unequal between people—that would have been difficult to imagine, let alone
predict, when Myrdal and his associates completed their work. The present book
analyses the story of economic development in Asia spanning half a century. This
chapter explains the conception and design of the study for the reader. It begins with
a discussion on Gunnar Myrdal, the author, and Asian Drama, the book, as a point
of reference. It then sets out the rationale and the object of the study, to outline its
structure and framework. This leads into a discussion, illustrative rather than
exhaustive, of some important ideas and lessons that emerge, which might serve
as a teaser. Thereafter, it provides a brief narrative on the contents and scope of
the book, meant as a road map for readers.
Gunnar Myrdal was a man of many parts. The word polymath is an apt description,
which might not suffice to describe a man who was a distinguished academic,
policy practitioner, member of parliament, cabinet minister, international civil
servant, political actor, public intellectual, and concerned citizen.1 This diversity
of experiences shaped his work and thinking.
In academia, Stockholm University was his institutional home (1933–1950).
He started as a brilliant theorist, a brash young academic,2 who went on to
1 For accounts of Gunnar Myrdal, the person and his life, see Streeten (1990, 1998); Appelqvist and
Andersson (2005); Bok (2005); Barber (2008); and Kanbur (Chapter 2, this volume).
2 Evidently, Gustav Cassel, whom he succeeded as Chair in Political Economy at Stockholm
University (1933–1939), once warned him against his brashness, ‘Gunnar, you should be more respectful
to your elders, because it is we who will determine your promotion’. Yes, the young Myrdal replied, ‘but it
is we who will write your obituaries’. After Cassel’s death, he did indeed write his obituary (Streeten 1990).
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4 Asian Transformations
3 Economic Theory and Underdeveloped Regions, published in 1957, was early thinking about devel-
opment, while Value in Social Theory, critical essays on methodology written earlier, translated into
English and edited by Paul Streeten, was published in 1958. For a more detailed discussion on Myrdal’s
academic writings, see Kanbur (Chapter 2, this volume). See also, Streeten (1998) and Barber (2008).
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¹ Or, before.
went up] i.e. from their own low-lying territory by the sea into the
hill-country of Judah.
went out against them] margin went out before them, i.e.
anticipated them, did not wait for them to attack him. In 2 Samuel v.
17 went down to the hold, an expression which might refer to some
part of the difficult hill-country of Judah in which he had long defied
Saul, or may mean the “hold” of Jerusalem, which David had seized
from the Jebusites (see note on xi. 5).
like the breach of waters] i.e. like the breach made by waters,
Probably the scene of the victory was a hill deeply scarred with
watercourses. The force with which God broke through the army of
the Philistines is compared with that of a torrent bursting forth from
the hill-side or forcing its way through all obstacles. Baal-perazim =
the Lord of breakings forth, i.e. upon the foe.
over against the mulberry trees] Render, along, parallel to. The
line of David’s attack is to be parallel to a line of mulberry trees (or to
a ridge on which mulberry trees stood) situate probably at right
angles to the line of the Philistine march. Thus David’s advance
would be concealed from the Philistines until the very moment of the
attack, which would fall on the flank of the Philistine march.
mulberry trees] or, as margin, balsam trees. Some kind of tree or
shrub from which gum exudes seems to be meant.
thou shalt go out to battle] Samuel has a more vivid phrase, thou
shalt bestir thyself.
16. smote the host of the Philistines from Gibeon even to Gezer]
This victory was decisive; the main army of the Philistines was
routed.
a tent] a new tent, not the old tabernacle which the Chronicler
believed to be at Gibeon (see xvi. 39).
5. the sons of Kohath; Uriel] Kohath had four sons (Exodus vi. 18
= 1 Chronicles vi. 18): Amram, Izhar, Hebron, and Uzziel. Here the
descendants of Amram (exclusive of the priests, the Aaronites)
represented by Uriel head the list (verse 5), and the descendants of
Izhar, Hebron, and Uzziel appear in verses 8, 9, 10 respectively.
Elizaphan (verse 8) either stands for the Izhar of Exodus vi. 18, or is
the name of some prominent descendant of Izhar after whom the
whole family was named. He is mentioned again in 2 Chronicles
xxix. 13. As regards number the Kohathites were 512 against 350 of
the sons of Merari and the sons of Gershom combined. In vi. 60‒63
(45‒48, Hebrew) 23 cities are reckoned to Kohath against 25 to
Merari and Gershom combined. The Kohathites formed the largest
and most important of the three divisions of the Levites.
to sound aloud] The cymbals mark the time for the other
instruments.
22. was over the song] The Hebrew word (massa) here twice
rendered “song” means “uplifting,” either of the voice in song, or in a
physical sense = “burden”; hence margin was over the carrying of
the ark.
²³And Berechiah and Elkanah were
doorkeepers for the ark.
23. were doorkeepers for the ark] The same statement is made in
verse 24 concerning Obed-edom and Jehiah (= Jeiel)! On Curtis’
view, this verse was added by the same writer as verses 19‒21,
who, having taken Obed-edom and Jeiel as part of the list of singers
in verse 18 no doubt thought that the names of the doorkeepers (the
last word of verse 18) had somehow been omitted. He supplied
therefore here the names Berechiah and Elkanah (taken perhaps
from ix. 16). A still later writer has attempted to put matters straight
by further adding at the conclusion of verse 24 “and Obed-edom and
Jehiah (Jeiel) were doorkeepers for the ark.”
27. of the song] margin, of the carrying of the ark. Compare verse
22, note.
7‒36.
The Psalm of Praise.
¹ Or, Meditate.
18. The lot] The Hebrew word (“ḥebel”) means a portion not
assigned by lot but measured by line; compare margin Canaan is co-
extensive with Israel’s inheritance.