How Asia turned poverty into riches
After the second world war, many Asian countries and many African countries were desperately poor, seemingly with little hope of future economic prosperity. Whereas most of sub-Saharan Africa has remained poor, many Asian countries have defied economic logic and ascended to the forefront of the global economy. Business correspondent Michael Schuman gives his explanation for this in his book The Miracle: The Epic Story of Asia’s Quest for Wealth.
The story starts with the founding of Sony Corporation by Akio Morita, and Japan’s rise to wealth. It then moves on to describe how the dictator Park Chung Hee managed to lead the war-ravaged South Korea down the path to prosperity by copying policies from the Japanese. Next comes Lee Kuan Yew who started with an impoverished island that was too small to be viable economically and turned it into the modern Singapore. Other parts of the success story include Hong Kong, Taiwan, China, Indonesia, India and Malaysia.
So what is the Asian secret to success? Different circumstances applied in each country, but a common factor seems to have been strong leadership committed to economic growth, adopting a range of risk-taking policies, some of which included protectionism, subsidising and encouraging particular industries, manipulating exchange rates to encourage exports, and vigorously attracting foreign investment.
The author argues, somewhat unconvincingly, that less government interference might have brought better results. My own reading of the evidence he has presented is that government interference is required in the early stages to start a country’s economic growth, and it is then necessary for the country to change to a more free-market approach to prevent the risk of collapse. The book is very entertaining to read, and I highly recommend it.