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Essay Subject: Analyzes ideas of economist Paul Krugman on nature & future of Asian success & applicability to West. Tables.... More...

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Paper Abstract: Analyzes ideas of economist Paul Krugman on nature & future of Asian success & applicability to West. Tables. Paper Introduction: KRUGMAN, ECONOMIC GROWTH, AND THE ASIAN MIRACLE The spectacular economic growth attained by the East Asia “Seven”—Hong Kong, Indonesia, South Korea, Malaysia, Singapore, Taiwan, and Thailand—in the East Asia region over the past three decades often has been described as an economic miracle (Krugman, 1994, p. 64). That this economic growth has been impressive is not open to question (refer to Table 1, below on this page, and Table 2, which may be found on the following page). Table 1 Economic Growth: Developing Countries By Region—1965-1991 ________________________________________________________________ Global Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. According to Krugman(1994, pp. Foreign Affairs, 73(2), 28-44. The explanations offered by these economists of how economicgrowth has been achieved by South Korea have emphasized the relationshipbetween economic policies and economic growth (Hughes, 1995, p. In fact, however, both of thesecountries revised their economic policies to make more productive use oftechnology so that economic growth may continue (Gibson & Tsakalotos, 1994,pp. Both the economic policies implemented by South Korea and Taiwan andthe more recent economic performance of the countries tend to refuteKrugman's argument that economic growth is a thing of the past for the EastAsia "Seven." Indeed, these countries do appear to be poised to challengecompetitively the larger industrial countries of the world in the years yetto come. (1996, July). 65) recognizes the impressive economic growthachieved the East Asian "Seven." He contends, however, that this growthhas occurred "in large part through an astonishing mobilization ofresources. 578-628). 91]________________________________________________________________exhausted the growth potential of the policies that they have followed forthe past three decades because the commitments of labor and capital thatgenerated the growth attained cannot be repeated. Automotive Engineering,1 4(2), 26. The East Asian "Seven" have been moving "upmarket intohigher-skilled industries, such as computers" ("You ain't," 1994, p. According to thisargument, macroeconomic stability has been essential to maintaining intra-sectoral and inter-sectoral balances in the economies of South Korea andTaiwan. References Gibson, H. In 1995, South Korea'seconomy grew by 9 percent (real GNP), and the growth projection (real GNP)for all of 1996 is 7.5 percent. Dutch tulips and emerging markets.Foreign Affairs, 74(4), 28-44. D., & Tsakalotos, E. Per capita incomes in East Asia "Seven" almost quadrupledover the past 25 years even in the face of rapidly growing populations.Per capita income reached US$1 , in South Korea in 1995. Krugman, P. The more recent policy actions of South Korea and Taiwan,as well as the most recent growth experiences of the countries, appear tosupport this position. 134). These changes in economic policy are a part of SouthKorea's effort to become a member of the Organization for EconomicCooperation and Development (OECD). The most recent productivity data from Taiwan directly challenges theargument of Krugman that further economic growth cannot be attained by thatcountry because the country's economy does not use its inputs efficiently.Taiwan's Directorate General of Budget, Accounting and Statistics announcedthat productivity gains in the country's manufacturing sector rose 8. 11 -122) argument is based largely on arefutation of the concept of comparative advantage in international tradein favor of an emphasis on the pervasive presence of increasing returns.He contends that diminishing returns may mean that the resources releasedby trade will not necessarily be employed in other sectors, so thatabsolute loss is a real possibility. Why have East Asian countries led economicdevelopment? Krugman (1995, pp. Treadgold, M. L. 64). Hiscontention is that, because South Korea and Taiwan did not divert the gainsfrom economic growth into productivity improvements, future economic growthwill not occur, as input-driven growth has reached its zenith. Hughes, H. South Asia 2. Krugman (1994, p. Further, the East Asian "Seven" are committing increasedinvestment to R&D-the R&D spending/GDP proportion in these countries isnearly as high as is that in Europe. Although East Asian growth most often has been described in termsof industrialization, services and agriculture, mining, and other sectorsof the economies in this region had to grow alongside industry. 62-78) contends that countries such as South Korea andTaiwan, for the most part, haveTable 2Economic Growth Indicators: East Asian "Seven" Countries-1965-1991________________________________________________________________Country GNP Growth (%)* Per Capita GNP Growth (%)*Hong Kong 8.1 6.1Indonesia 6.7 4.5Malaysia 6.5 4. 7.1Thailand 7. 89). Thus, in the early yearsof this export-led growth, labor intensive industries were the vehicles ofgrowth. Asian-PacificEconomic Literature, 134-149. 9 ]________________________________________________________________ Most of these countries follow economic polices that are much morerestrictive than those applied in the major industrial nations (Hughes,1995, p. Recent investments in assembly automation,however, have begun paying off in significantly higher productivityincreases. (1994, April). The rising east. Review of International Economics, 1, 11 -12. 65-67). 28-44), upgrading the quality of the labor force througheducation is virtually complete, and the combination of high savings ratesand deferred consumption have reached reasonable limits in countries suchas South Korea and Taiwan. 92). (1996, February). You ain't seen nothing yet: The biggest threat to workers is not fromimports, but from a mass migration of investment. Follow the club rules. The East Asian "Seven" have become less dependent on agriculture andextractive enterprises, as they have shifted to industries that produceeverything from steel and ships to automobiles and aircraft (Halloran,1996, p. Krugman, P. Economic Record, 71(212), 88-1 4. Singapore 8.4 6.6South Korea 8.9 7.3Taiwan 9. (1994, November-December). Conversely, he contends thatincreasing returns in some industries may inhibit the transfer of resourceselsewhere. KRUGMAN, ECONOMIC GROWTH, AND THE ASIAN MIRACLE The spectacular economic growth attained by the East Asia "Seven"-HongKong, Indonesia, South Korea, Malaysia, Singapore, Taiwan, and Thailand-inthe East Asia region over the past three decades often has been describedas an economic miracle (Krugman, 1994, p. By 2 , SouthKorea anticipates a per capita income of US$2 , . (1995, July-August). Many Western policy theorists contend that the record ofeconomic growth attained by the East Asian "Seven" hold valuable lessonsfor the major industrialized economies. (1996, Spring). Asian growth... (1993). (1994, 1 October).Economist, 333(7883), G2 -G22. The Bank of Korea loweredits reserve requirement ratio in April 1996, while the Ministry of Financeand the Economy eased foreign exchange controls. The myth of Asia's miracle.Foreign Affairs, 73(6), 62-78. Macroeconomic stability, together with high rates of savings andinvestment, also contributed substantially to the economic growth attainedby South Korea and Taiwan (Treadgold, 199 , pp. (1995, March). seems to be driven by extraordinary growth in inputs like labor andcapital rather than by gains in efficiency" (Krugman, 1994, p. These export strategies focusedon the industries wherein the relatively low labor costs in both SouthKorea and Taiwan created a competitive advantage. South Korea has adopted economic policies that, among other outcomes,will lead to the deregulation of that country's financial sector (Lee,1996, pp. 28-44) has argued that the limits of economicgrowth based on policies such as those discussed above have largely beenreached by countries such as South Korea. Banker, 146(845), 65-67. That this economic growthhas been impressive is not open to question (refer to Table 1, below onthis page, and Table 2, which may be found on the following page).Table 1Economic Growth: Developing Countries By Region-1965-1991________________________________________________________________Global Region _ Mean Annual Growth Rate (%) East Asia "Seven" 6.5 Other East Asia 2. Taiwanese productivity up. Essentially, Krugman (1993, pp. Lee, C. Competitiveness: A dangerousobsession. Krugman, P. Macroeconomic management. Per capita income inTaiwan has passed US$8, . Krugman's (1993, pp. The principal problem with this argument appears to be that Krugmanmistakenly assumed that South Korea and Taiwan would not adopt neweconomic policies that would lead to a productivity-driven economic growthin the future. Once one accounts for the role of rapidly growing inputs inthese countries' growth, one finds little left to explain. BothSouth Korea and Taiwan adopted polices that emphasized exports at theexpense of current domestic consumption. The OECD recommended that South Koreareform its financial system to strengthen links between the country'ssegmented market and global financial markets. Economic Geography, 72(3), 259-292. (1996, July). (199 ). The scope and limits offinancial liberalization in developing countries: A critical survey.Journal of Development Studies, 3 (3), 578-628. To be sure, this position has many detractors among professionaleconomists. (1994, March-April). 26).According to the agency, Taiwanese productivity gains between 1992 and 1994averaged 3.5 percent annually. Martin, R., & Sunley, P. 65).Krugman (1994, pp. Halloran, R. 8). Latin America and Caribbean 1.8 Middle East and North Africa 1.8 Sub-Saharan Africa .2 [Source: Hughes, 1995, p. percent in the first half of 1995 ("Taiwanese productivity", 1996, p. Foreign Policy, (1 2), 3-21. 4.6 * Mean Real Growth [Source: Hughes, 1995, p. 11 -122) argues that countriessuch as South Korea and Taiwan, while achieving high levels of economicgrowth through massive but non-replicable resource inputs, have not figuredout how to use efficiently the gains from this economic growth. Paul Krugman's geographicaleconomics and its implications for regional development theory: A criticalassessment. Electronics and information technology industries are leadingthis trend. Krugman, P. On the relationship between trade theory andlocation theory. Economist Paul Krugman (1994, pp.62-78) dissents from this view. G2 ).Taiwan now is already the world's second-largest producer of notebookcomputers. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.