East Asia's Economic Success: Conflicting Perspectives, Partial Insights, Shaky Evidence

Abstract

Neoliberal economists say that growth is easy, provided the state does not obstruct the natural growth-inducing processes of a capitalist economy. They point to the success of South Korea and Taiwan as evidence that this proposition also holds for quite poor economies. Using chapters of Helen Hughes's edited volume by way of illustration, this article shows that the neoliberals ignore so much contrary evidence as to suggest that the neoliberal paradigm has entered a degenerative stage, like classical economics in the years before Keynes's breakthrough and like much Marxist writing of the 1970s.Two recent books about East Asia offer ways forward. The one by Alice Amsden argues that Korea has done better than other developing countries because it has created a more powerful synergy between a state that aggressively steers market competition and large, diversified business groups whose firms focus strategically on production processes at the shop floor. In conditions of “late development” this synergy is the key to success. Stephan Haggard's book accepts the core economic mechanism of the neoliberals but argues that the choice between sensible export-oriented policies, as in East Asia, or unsensible secondary import-substitution policies, as in Latin America, is determined by a complex conjunction of international pressures, domestic coalitions, political institutions, and ideas.Both books make important contributions to the debate. But they are weakened by not situating the experience of their case studies within an account of trends in the world system and by not addressing the question of what prevented massive “government failure” in market interventions in the East Asian cases. The last part of this paper takes a short step in this direction.