[[Export Promotion & Development Strategies of Japan and The East Asian Tigers Flashcards
Notes
Need to reorganise info
Can’t tell if finished VLE, do check
Who are the East Asian Tigers?
Korea, Hong Kong, Taiwan and Singapore
What are export promotion strategies?
What is the labour-intensive path of development?
What is the role of the developmental state in the east Asian growth miracle?
What are the main factors that enabled the east Asian countries to achieve high levels of economic development?
What is the developmental state strategy?
Developmental state strategy compared to the Washington consensus
What is the Japanese model of economic development in post-war catch-up growth?
What are the economic strategies of the East Asian Tigers? What role did the state play in the economic development?
What are the factors that underpinned the success of the east Asian strategies?
- Role of the devleopmental state
- Good pre-conditions
- Cultural factors
To what extent are the economic strategies replicable in other regions?
//Japan
First Asian country to achieve modern economic growth
Key institutional change: Meiji Restoration (1868): after isolationanist period -> westernisation policy to catch-up with the west
Slow growth initially but followed by exponential growth from 1950s
First Asian country that use labour-intensive Industrialisation strategy: utilising low wages (advantage in textile industries bc lower wages and continuously improving productivity overtook UK productivity -> success in cotton textiles) and imported technology (cotton + silk industry developed bc of transferring western technologies and adapting to Japanese socio-economic and cultural environment -> production mechanisation and beginning of factory prodution, where cheap labour was vital for sucessful adoption) -> transitioning to innovative sectors via flexible production
Similar strategy adopted by the NICs: achieved labour-intensive growth through policies promoting factor accumulation, export orientation and labour quality
Catch-up began in late 19th century, continued until the end of WWI
1920-1950: economic development stagnated and even reversed
1930: overtook UK as leading exporter of cotton textiles
1950-1990: catching up process resumed
1990-2000s: period of economic developemnt reversal
Interwar period: Manufacturing and mining sectors drove the catching-up process
Textile industries: cotton industry + silk industry -> became the 1st industrial sectors in Japan
textile factories heavily relied on the female labour force
State’s role to facilitate Japanese textile industries development: investment in infrastructure, human capital, and research & development (R&D)
Growth of textile sector and merchant trading houses -> assisted financial institutions development
As economy developed & wages increased -> moved away from low-skill sectors (cotton textiles)
sectors migrated to lower wage economies Korea -> China -> Bangladesh
Flying Geese Model: migration of sectors and industries to countries with low wages, where the leading goose: most developed of the economies -> restructures economy -> industries/sectors with more labour-intensive and less technologically advanced migrate (like flying geese) to a less developed economy (Kojima, 2000)
Post WWII:
Shifted from cotton textile leader to more advanced industries
First phase: specialised in shipbuilding -> motor vehicles and consumer electronics (moving from imitation to innovation)
1980s: Japanese manufacturing attained technological leadership position in many sectors using modern flexible production methods, undermining US mass-production methods
//Third Industrial revolution
1970s: Japan and Europe introduces new industrial processes -> eroded US industry lead
Main inputs:
1. lean production (very small stocks of components)
2. flexible capital (same machine makes several products)
3. flexible labour (same worker does many tasks)
Outputs: products were…
1. high quality
2. various in types
3. produced at low cost
E.g. modern cars and consumer electronics
Late 20th century’s new processes -> produce cheap goods of higher quality (not using old mass-production techniques without the penalty of standardisation) -> consumers can have low cost, high quality and variety simultaneously
Example: Toyota cars (largest manufacturer globally and generally considered the most efficient
Features of Japanese tech:
flexibility, total quality control and ‘just in time’ production -> summarised as automation
Early 1970s: Japanese imports making way to USA domestic market
US car producers:
-knew by 1970s large Japanese car plants had higher productivity than theirs
-misread signals and thought Japanese success was bc of automation
-led US companies to introduce robots in car assembly -> built highly-automated pants to make 1 model -> but even with robotic car assembly, labour productivity still lower than Japanese car plants
another issue: inflexible newly integrated US plants (if model they were building sold badly -> very expensive to change plant and produce different one)
No direct relationship beteen automation and labour productivity (US: less automation and less prouctivity than Japanese. Europe: high automation but low labour productivity)
1980s: Japanese production methods transferred overseas via foreign direct investment (FDI) by Japanese multinationals and via imitation
From mid-1990s: US manufacturing had a period of adjustment and became successful in applying IT, achieving acceleration of productivity growth
As western manufacturing ‘Japanised’, Japanese catching up stalled
//NICs
Second wave of Asian countries to develop after Japan
= South Korea, Taiwan, Hong Kong and Singapore (NIC4)
Success: economic miracle bc of rapid economic growth and development achieved
Explained by factors:
1. ‘Asian values’
2. Active role of the state
-adoption of activist industrial policies
Slowed down in 1990s
Key factors underpinning economic success:
1. Policies promoting factor accumulation and targeting transfer of savings/foreign capital -> investment -> capital goods -> manufacturing
Growth of inputs
Invest large amount of capital during post-war period (Japan, Korea and Taiwan mostly in savings. Hong Kong and Singapore FDI. Also channelled into productive sectors (particularly industry, rather than real estate for example)
- Trade policies leaning towards export promotion
Labour inputs and quality
Increased both (1) labour market participation rates and (2) education levels in post-war era
East Asian economies benefitted from demographic dividend (situation where the share of the working age population > share of non-working population (below 15 years old and retired people))
Formal labour market grew thanks to increase in women participating
Experienced structural change in employment from agriculture to industry
(2) Human capital quality grew thanks to inreasing school years and investment into the education quality (Korea, Hong Kong and Taiwan’s starting conditions of education were satisfactory relative to Indonesia and Malaysia) - Policies expanding labour participation market and prioritising education & human capital
Export Orientation
While Latin American countries adopted ISI strategy, east Asian countries’ governments weren’t trying to arbitrate success/failure of their industries
Strategic industries were producing for international markets -> incentivised productivity growth since unproductive industries couldn’t succeed on international markets -> helped overcome lack of domestic competition and issue of small domestic markets
Government w/ assistance of specialised state agencies: promoted orientation towards international markets by various forms of assistance provided to exporters, like collection of information, finding new markets and product marketing from NICs abroad
3.5 Confucianism
Tricky bc also used as explanation for slow growth in 18th and 19th centuries
Confucian values: diligence, frugality, family solidarity, group harmony and emphasis on education
Criticised bc puts little emphasis on other crucial factors, downplaying FDI and education quality - Developmental states focusing on promoting labour-intensive industrialisation
East Asian Developmental State
Governments didn’t try to relinquish market like Soviet bloc, rather tried to complement markets (not replace), focusing on coordination failures which holds back development
