The East Asian crisis, technical change and the world economy

Abstract

For everyone interested in the nature and causes of economic growth, events in East Asia over the past half century have been of outstanding interest. In the 1980s and 1990s, many economists were attempting to explain the so-called 'East Asian miracle', culminating in the report with that title by the World Bank in 1993. In 1998, the problem has been to explain the collapse of this 'miracle' and to assess the consequences for the world economy. This article first of all briefly discusses the main growth theories and models of economists, starting of course with Adam Smith's Wealth of Nations . The second part then considers the World Bank report on East Asia in the light of this earlier discussion of growth theory. It argues that, though very convincing on several points, the World Bank report paid insufficient attention to the role of technical change in economic growth. Finally, the third part discusses the collapse of the 'miracle' and offers a critique of the IMF prescription for various Asian countries.