Enter the Dragon: Lessons for Australia from Northeast Asia?

Abstract

The 1980s saw a conscious restructuring of economic life in Australia. The direction of that restructuring was derived partly from prescriptions about the virtues of free trade and government deregulation. Another influence has been the view that the economic success of Japan and the Asian ‘dragons’ is because of their adoption of free trade and liberal market regimes. In this paper, evidence from Korea and Taiwan is used to show that this interpretation is seriously flawed. The growth of the dragons was not driven by comparative advantage. Rather, the industries of the dragons were set up independently of their competitiveness; some became competitive by exporting. Industrialisation in the newly industrialised countries (NICs) exemplifies a variety of forms of local initiative by a state: how does it have the will and power to create industrial policy? The development of state policy depends on local class structures and perceptions of the global political and economic environment that nullify attempts simply to copy policy into different social and economic circumstances. The lessons of the economic success of the Northeast Asian NICs are improperly drawn in two respects: these are dirigiste, not free market, economies; and even if that intervention has been for the good it does not follow that similar policies could be applied, much less be successful, in the different place that is Australia. This is the geographic lesson: places differ, and so, therefore, must policies.