Can the East Asian model of development be generalized?

Abstract

Export-led growth has become increasingly popular among analysts (and some governments) as a development strategy. Besides contrasting its virtues to the distortions of the import substitution model popular through the 1960s, advocates of the model frequently illustrate its merits by pointing to the remarkable success of its most prominent practitioners, the East Asian ‘Gang of Four’ (Hong Kong, Korea, Singapore and Taiwan). This study explores a possible limitation of the model, known as the fallacy of composition: while the model may work well if pursued by a limited number of countries, it may break down if a large majority of developing countries seeks to pursue it at the same time, because the resulting outpouring of manufactured exports might be more than Western markets could absorb. Protectionist response might be the result of attempts to generalize the East Asian export model of growth.