The investment-profits nexus in East Asian industrialization

Abstract

Both orthodox and heterodox interpretations of East Asian industrialization have concentrated on questions of resource allocation, and neglected overall capital accumulation and the role of government in accelerating it. This paper argues that corporate profits and other profit-related incomes were the main source of investment in the most successful East Asian economies. Government policies played a major role in promoting capital accumulation by creating rents and animating the dynamic interactions between profits and investment. This was achieved through a broader set of measures than those usually identified as “selective industrial policies.”