East Asian economic crisis and the communitarian development model UNGSUH K. PARK

Abstract

The rapid economic growth of East Asian countries during the last four decades, which was followed by a near-simultaneous and massive economic crisis, supplies an entirely new dimension to the economic development literature. The rapid industrialization processes of those countries combined with the open and export-oriented strategies, which directed the priority investment targets from labor-intensive to capital-and technology-intensive industries over time. This aspect of the so-called East Asian development model is fairly well understood by economists. But the similarity in development strategy provides no explanation of the near-simultaneity of the crises of 1997. Obviously the role of excessively volatile international capital movements is important in explaining the crisis but there is nothing unique in their role for East Asia. International funds invest profusely when they enter and withdraw in a panic when they exit wherever they go. The simultaneity of the East Asian crises is the inevitable result of the unique interdependence of the growth processes that depended heavily on the partial relocations of industries between these countries and the somewhat mysterious East Asian development model that depended heavily on the interactions between strong governments and cooperative people. The latter is called the social contract in the East Asian communitarian societies. This chapter attempts to define the social contract of East Asian communitarian societies and expose the latent weaknesses of their development model which is supposed to reflect another equally mysterious concept: the Asian value.