Saturday, August 4, 2007

The Asian Tigers

Here are some central references on the Asian Tigers issue:

Paul Krugman, "The Myth of Asia's Miracle," Foreign Affairs, Nov./Dec. 1994

Alwyn Young, "The Tyranny of Numbers," Quarterly Journal of Economics,
August 1995

Michael Sarel, "Growth in East Asia", International Monetary Fund, 1996.

Sarel in particular gives a useful summary. I especially like this bit:

"The traditional formulation of this equation suggests that a significant and sustained rate of technological progress is the only possible way, over the long run, for an economy to achieve a sustained rate of growth in output per person. Why? The labor participation rate can be increased for a while and will increase production, but obviously it cannot increase indefinitely (everybody will ultimately be employed)."

The big point is that conventional Demographic Dividend economies have much more "slack" available than the current East European ones, and this is why their situation is much more win-win.

Also worthy of note is this part:

"A sensitivity analysis shows that most parameters do not affect the results in any significant way, but that the a parameter and the choice of a specific estimation period are all-important. Small, simultaneous changes in both a and the estimation period give results opposite to the neat conclusions presented above. The findings reported by Young (1994a) regarding the low productivity growth in the Four Tigers were obtained by using a relatively high value for a (0.45) and a specific estimation period (1970-85)."

I would say that the time period is all important. Sarel breaks it down between 1960-75, and 1975-1990, and it is clear TFP llevels are up in general in the second period on the first, especially if we take on board what Barro has to say about data revisions for Singapore.

So where are the EU8 etc in all of this? Good question.

And here's a whole reading list on the topic.

and here is Paul Krugman reviewing the "perspiration" theory of economic growth.

And here is Robert Barro, The East Asian Tigers Have Plenty to Roar About.

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