Can the East Asian model of development be generalized? a comment

Abstract

As little as three years ago before Mexico led the Latin American march to debt renegotiations the East Asian development experience was generally viewed as something of an annoying curiosum in the South. Admittedly, the so-called Gang of Four had achieved rapid growth even growth with equity during the 1960s and 1970s by shifting from import substitution to export-oriented policies; but they were too ‘special’so the argument ran -in terms of their culture, their size, their status as United States protectorates. to be of much relevance to the majority of Latin American and other Asian developing countries. The advent of the debt and adjustment crisis of the 1980s has changed the scenario just a bit. There persists substantial annoyance with the preachings of some scholars (and institutions) who seem to be offering a standard simple-minded panacea for widely varying and always complicated individual country situations. But there is also in evidence greater interest in the East Asian experience. especially that of Taiwan and South Korea, given their demonstrated greater capacity to adjust to the post-197Y deterioration of the international environment and not simply by cutting back imports and growth, but also by capturing a larger share of the world’s dwindling export markets. This interest has spread even into such unlikely places as UNCTAD and ECLA and given rise to a burst of academic conferences analyzing the post-war experience of the East Asian and Latin American NICs in a comparative context. It has also led to the grudging admission by at least some influential Southern observers that. cultural differences aside, the East Asians did not really enjoy substantial ‘special’ advantages in their treatment by the North, either in the form of greater ‘net” foreign capital inflows or exemption from the mushrooming arsenal of neoprotectionist devices. The jury is still out on whether the world is really working its way out of the general LDC debt crisis or has merely managed to postpone it. The answer, I believe, depends heavily on whether or not the debate continues to focus on the choice between greater short-term austerity (supported by the IMF and the creditors) and greater short-term liquidity (supported by UNCTAD and the debtors) instead of on how to achieve longer term structural adjustments with the help of additional longer term liquidity. That is why I am almost as skeptical about Mexico’s being held up as ‘the’ model of structural adjustment as I am about the Philippines. In my view, it will take country-by-country assessments of what is wrong with the basic economic structure and the policy mix which has prevented most LDCs from ‘rolling with the punches’ delivered by the deteriorating international environment of the 1970s and early 1980s. If these questions are not asked. and answered, I am afraid that the substantial human as well as firiancial costs of the current crisis will have been incurred in vain and that we will all have to do it again at a later date. In the context of such a country-by-country reassessment of the structural rules of the game, and of the potential role of foreign capital, the relevance or irrelevance of the East Asian experience remains, I believe, an important, if by no means dominant, part of the landscape. Whether Latin America and other Asian NICs conclude that the demonstrated lack of dependability of the international environment dictates a return to a new and better form of import substitution or that their demonstrated superior adjustment capacity implies the need to borrow and adapt some of the open economy lessons of the East Asians is of the utmost importance at this critical point in history. It is for this reason that William Cline’s February 1982 article in this journal merits our attention. For it seems to be