Lessons from East Asian Growth: Innovation Matters

Abstract

Abstract Growing fast as PRC is desired throughout the developing world. But PRC’s growth was neither predicted ex ante nor explained ex post in most theories of economic growth or trade. Left alone in the policy forum, development economists often comment and make comparison with their own economies, for example, Basu and Binh for India and Vietnam. We augment Basu’s discussions to apply as far as possible by comparing with East Asian economies over per capita GDP, back to 1950 or into history, gaining novel perspective.PRC’s trajectory is often not replicable: lacking market size to bargain like China, on terms about high-speed rail, for Vietnam; hard to reform with TVEs, under current parliamentary institutions, for India.Studying other East Asian economies with fast growth allows us to ask how much Chinese growth depends on Hong Kong and Taiwan (while India could not, on Goa)? Would PRC’s growth peak out soon? Is China closing in on Korea, like Korea on Japan? Must India forswear its parliamentary democracy for a Chinese trajectory, rather than a Korean or a Japanese one?We emphasize that innovation, more than imitation, is the root for GDP growth. It is necessary for leapfrogging or graduating from being underdeveloped.KeywordsInnovationIntra-East Asia interactionsGrowth of PRC and prewar ChinaIndiaMarket orientationEast Asian growth