Asian Miracles, or Not?

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Asian Miracles, or Not?

• J.D. Han

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Asian Miracles by World Bank

• The first official report started in 1993.
• The full report can be found at
  http//www-wds.worldbank.org/external/default/main
  ?pagePK64193027piPK64187937theSitePK523679me
  nuPK64187510searchMenuPK64187283theSitePK5236
  79entityID000009265_3970716142516searchMenuPK6
  4187283theSitePK523679

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• The High Performing Asian Economies (HPAEs)
  Japan, Hong Kong, the Republic of Korea,
  Singapore, Taiwan, Indonesia, Malaysia, and
  Thailand.
• It finds that the diversity of experience, the
  variety of institutions, and the variations in
  policies among the HPAEs does not allow a model
  to be developed.
• However, some lessons for other developing
  countries can be learned from the East Asian
  experience.
• First, growth is not Automatic HAPEs use a
  variety of government intervention or policies to
  achieve three functions of growth - accumulation,
  allocation, and productivity growth.
• Second, it is essential to get the fundamentals
  right. 1) High levels of domestic saving, 2) good
  macroeconomic management, and 3) broad based
  human capital.
• Third, the government intervention should have
  specific orientations, such as limited
  price(market economy) distortions.

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1. Fact

• Rapid Growth in HPAEs
• (Recent) High Growth of China

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2. Stylized Facts of East Asian Countries

• There are many features.

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3. Analysis

• What caused such a high growth?
• In its explanation, the World Bank report is
• Neo-Classical Theory(K, L, and Technology) plus
• Endogenous Growth Theory (On Human Capital
  Social Capital and Government Policies)

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In particular, Word Bank attributed the Asian
Miracles to

• 1) Accumulation of Physical Capital (Savings)
• 2) Fostering Human Capital (Education)
• 3) Social Capital (Harmony-not confrontation, Law
  and Order, Lack of Corruption)
• 4) Sound Government Policies (Industrial Policy,
  Export Promotion, etc.)
• Slightly ambivalent about Technology(?).

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• 5) The composition of Capitals is important
• -World Bank report classifies K into at least 4
  (Physical Natural Human Social)
• West Africa Natural Capital is relatively large,
  but Human Capital is relatively small
• East Asia Human Capital is relatively large and
  Natural Capital is relatively small

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• World Bank report comes up with a new measure of
  Capital Accumulation conducive for Economic
  Growth
• Genuine Saving Rate

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Human Capital is fostered through
EducationPioneer of research by Gary Becker
4. Focusing on Education
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Public Expenditure on Education is misleading It
is not High in Asia
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However, we should include Private Expenditures
on Education

• 1) Private Spending on Education is large in East
  Asia
• Juku (Japan)
• Hank-Won or Ga-Wai (Korea)
• Buxi(China)
• 2) East Asia is the major source of International
  Migration for Education
• Largest groups of International Students in
  English Speaking Countries are from East Asia
• Refer to Paper by Han and Ibbott(2005).

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Reflect on Education in East Asian History

• Neo-Confucian Concept of Social Class
• Social Class Structure
• Social Mobility and Education
• Click here for an interesting paper on the social
  mobility of China

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• Education is worth investment only when it
  helps social mobility.

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Encyclopaedia Britannica says

• Ching dynasty
• Social mobility increased during the early
  Ch'ing, supported by a pervasive belief that it
  was possible for a peasant boy to become the
  first scholar in the land. An ethic that stressed
  education and hard work motivated many households
  to invest their surplus in the arduous
  preparation of sons for the civil service
  examinations. Although the most prestigious
  career in Ch'ing society remained...
• Ming dynasty
• ...the Ming civil service, that influential
  families did not monopolize or dominate the
  service, and that men regularly rose from
  obscurity to posts of great esteem and power on
  the basis of merit. Social mobility, as reflected
  in the Ming civil service, was very possibly
  greater than in Sung times and was clearly
  greater than in the succeeding Ch'ing era.
• Tang dynasty
• ...examination system had facilitated the
  recruitment into the higher ranks of the
  bureaucracy of persons from lesser aristocratic
  families, most officials continued to come from
  the established elite. Social mobility increased
  after the An Lu-shan rebellion provincial
  governments emerged, their staffs in many cases
  recruited from soldiers of very lowly social
  origins, and specialized finance...

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Contemporary China

• X.Wu, Institutional structures and social
  mobility in China 1949-1996 ???????
  ????????????, edited by D.J.Treiman, 2001
• Results show that (1)receiving education or
  obtaining political credentials are two major
  channels for individuals to achieve upward social
  mobility in the hierarchical status system of
  socialist China (2)there exist high rates of
  inter-generational inheritance in terms of status
  as defined in the Chinese institutional context
  (3)although one can overcome disadvantages in
  family background by acquiring educational and
  political credentials, access to these two
  fundamental currencies of mobility is highly
  constrained by one's hukou origin and first work
  unit affiliation. The analysis reveals an
  intertwined relationship among hukou status, work
  unit status, and employment status. The temporal
  trend of social mobility, especially the impact
  of economic reform, is also addressed. Economic
  reform, especially during its late stage, has
  yielded limited consequences for the Chinese
  stratification system. The research contributes
  to understanding of how the Communist party-state
  controlled and allocated life chances and status,
  which in Western societies is allocated mainly
  through competition in labor markets.
• What does this mean?
• Fully paper is at http//72.14.205.104/search?qca
  chebSx1y9NxpFoJwww.ecsocman.edu.ru/db/msg/24362.
  htmlsocialmobilityinchinahlenctclnkcd7
• It has been changing The number of Chinese
  students going overseas is increasing, reflecting
  the Chinese education boom.

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5. Focusing on Social Capital

• Still we have to grasp the concept of Social
  Capital in the East Asia -gt We have to study the
  East Asian Social Institutions such as Society,
  Government, and Enterprises. They should include
  Value System, Organizations, Polices, and
  Management Styles.