The Sources of East Asian Economic Growth Revisited

The Sources of East Asian Economic Growth Revisited

Lawrence J. Lau and Jungsoo Park* Stanford University and the State University of New York at Buffalo September, 2003

*

The authors are Kwoh-Ting Li Professor of Economic Development, Department of Economics, Stanford University and Assistant Professor of Economics, Department of Economics, State University of New York at Buffalo, respectively. This paper was prepared for the Conference on International and Development Economics in Honor Henry Y. Wan, Jr., Cornell University, Ithaca, September 6-7, 2003. An earlier version of this paper was presented at a workshop on Rethinking the East Asian Miracle, San Francisco, February 16-17, 1999. We are grateful for helpful comments from Ronald McKinnon, Howard Pack, Dwight Perkins, Assaf Razin, Joseph Stiglitz, Henry Wan, David Weinstein and Shahid Yusuf. We wish to thank the World Bank and Wallace R. Hawley (through the Wallace R. Hawley Director’s Fund at the Stanford Institute for Economic Policy Research) for their generous support of this research. Responsibility for any error is solely ours.

The Sources of East Asian Economic Growth Revisited Lawrence J. Lau and Jungsoo Park Stanford University and the State University of New York at Buffalo Abstract Kim and Lau (1994a, 1994a) found that the postwar economic growth of the East Asian newly industrialized economies (NIEs)—Hong Kong, South Korea, Singapore and Taiwan--was mostly the result of the growth of tangible inputs--tangible capital and labor--and not technical progress or equivalently the increase in total factor productivity. By contrast, the economic growth of the developed Group-of-Five (G-5) countries—France, West Germany, Japan, the United Kingdom and the United States--was mostly attributable to technical progress. These empirical results, as well as those of Alwyn Young’s (1994, 1995), form the basis of Paul Krugman’s (1994) provocative article on the “The Myth of the East Asian Miracle”....