The Growth of Tigers, Elephants, and Other Metaphorical Creatures under Heterogeneous Capital

Abstract

Hong Kong, Korea, Singapore, and Taiwan are the East Asian Tigers, and true to the metaphor, they have been ferocious in their economic growth. During the decade of the 1950s, their real GDP grew at an annual rate of 6.5 percent. That already-rapid rate soared to 9.3 percent during the 1960s and rose again to 9.4 percent during the 1970s before moderating to 7.5 percent during the global slowdown of the 1980s. On balance the Tigers grew at an annual rate of 8.5 percent over the entire forty-year period. Equally impressive has been their record of annual labor productivity growth, with decade average percentages of 4.3, 6.3, 6.0, and 5.4 respectively and with an overall rate of 5.7 percent. Such ferocious growth is phenomenal, and to some authorities it is simply miraculous [40, 1; 38, 3, 15]. The Elephants, countries of the Organization for Economic Cooperation and Development (OECD), plodded along a path that shows just how impressive the Tiger run has been. In the 1950s and 1960s, the Elephants had real GDP grow annually at 4.5 percent and 5.2 percent respectively whereas in the 1970s and 1980s they grew yearly at 3.4 percent and 2.6 percent for a four-decade average of 3.9 percent. Similarly, their productivity growth occurred at annual percentages of 3.9, 4.2, 2.1, and 1.7 across the respective decades making the forty-year average 3.0 percent. Thus, in rough terms, the Tigers expanded twice as fast as the Elephants. Even more strikingly, they grew in productivity more than three times as fast as the Latin Rim Bulls--Argentina, Brazil, Mexico, and Venezuela. At one time the Bulls were believed to have enormous growth potential if only because of their geographic proximity and business ties to the United States. Nonetheless, they managed an average productivity growth rate of merely 1.7 percent per annum over the forty-year history.