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The Asian Miracle
The “Asian Miracle” depicts the new recognition among Western economists and opinion leaders on the outstanding record of high and sustained economic growth experienced by eight Asian countries between 1960 and 1990.
During this period, the economies of Japan, Hong Kong, the Republic of Korea, Singapore, Taiwan, Indonesia, Malaysia, and Thailand behaved unusually when benchmarked against other developing economies by achieving extraordinary growth rates and surpassing Western economies, hence effectively transforming themselves from peasant economies to industrial powerhouses on the back of export-oriented policies and strong development approaches.
Consequently, the “Asian Miracle” denotes the success of the mentioned Asian countries in sustaining outstanding economic growth over an expansive period of time-based principally on capital accumulation arising predominantly from export-oriented economic practices.
Explanation of Terms
Primary import substitution: A government approach that underscores replacement of some agricultural and industrial imports not only to facilitate local production for local consumption, but also to create employment opportunities, minimise foreign exchange demand, inspire innovation, and enable the country to become self-reliant.
Primary export substitution: An approach aimed at stressing the importance of (1) producing goods for export rather than for domestic consumption, and (2) exporting products for which the country has a comparative advantage.
Heavy chemical industry drive: An economic development plan ratified in South Korea in the 1970s to handle the transition from a peasant economy to a comprehensive industrial economy through the development of several key industries focussing on steel production, petrochemicals, automobiles, machine equipment, shipbuilding, and electronics.
Flying geese phenomenon: A perspective held by Japanese scholars that not only perceived Japan as a leading powerhouse in Southeast Asia in the 1960s economic dynamics, but also postulated that Asian countries will be at the same level as the West as a part of a regional hierarchy whereby the development and production of commoditised products would increasingly move away from the more developed nations to less developed ones.
Sector targeting: An extremely targeted and visible investment promotion approach which not only focuses attempts on critical sectors of the economy where a particular country or group of countries may demonstrate a clear competitive advantage but also regards a strong value proposition as best practice among policymakers and investment promotion experts.
Picking winners: A term used to describe how governments assist in the stimulation of economic growth and creation of new job opportunities by using taxpayer’s money and tax credits to invest in organisations that create jobs and provide other competitive advantages to the population.
Favourable External Environment and Asian Success
A favourable external environment served as one of the underlying factors that, to a large extent, led to the Asian success between the 1960s and 1990s. From the discussion on the “Asian Miracle,” it is evident that East Asian countries succeeded in sustaining outstanding economic growth and transforming their economies due to exceedingly strong export-oriented policies as well as effective development policies.
Asian Tigers such as South Korea and Taiwan subsidised the production of export products while at the same time lowering interest rates, hence effectively creating a favourable external environment through which they could export more goods at a lower price than what was being offered by western countries.
The external environment provided the needed markets for the hugely subsidised goods produced in the Asian countries, hence ensuring a massive capital accumulation in these countries which was in turn used to promote learning as well as hasten economic growth and prosperity.
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