East Asian Economic Performance: Miracle or Just a Pleasant Surprise?

P UBLICATION of the East Asian Miracle (EAM, World Bank, 1993) appears, to borrow a phrase, to have generated more heat than light. The EAM analysed reasons for the economic success of the eight high performing Asian economies (HPAEs) — Hong Kong, Indonesia, Japan, Malaysia, Republic of Korea, Singapore, Taiwan and Thailand. The hope, at least of ‘neutral’ observers, was that we would be able to derive lessons regarding effective economic policies from a study of the experiences of the successful East Asian economies. The general criticism of the Report is that it tried to mould the HPAEs’ experiences so that the lessons were consistent with Bank policy, in the process losing many distinguishing features of the EAM; more serious criticisms are that the report obfuscated and distorted the truth. It is not our intention to reopen debate about the Report (fully aired in a special issue of World Development, April 1994; and Rodrik, 1994). We do wish to address three questions. What were the distinguishing features of the East Asian economic success that led some observers to claim a miracle? What elements of economic policy contributed to their success, and are such elements present in the economic policies proposed by the Bank (in, for example, adjustment programmes)? Are there features of the HPAEs that can be adapted to help design successful policies for other countries? Put succinctly: what did they do that appears so good, how did they do it and can others do it? Writing in 1998, it may appear irrelevant to talk of an East Asian miracle as so many of the economies we consider have recently endured currency crises of varying degrees of severity. Current problems should not detract from the sustained and generally impressive growth achieved by these economies over the