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Perspectives on East Asian economic development model: the roles of external economic assistance and timely government intervention

Perspectives on East Asian economic development model: the roles of external economic assistance and timely government intervention

The East Asian economic developmental model has been one of the most distinguished features in the field of comparative political economy and the origins of East Asian development have been controversial. For example, Bruce Cummings contends the critical role of American hegemony during the Cold War, while David Kang pays attention to the dynamics of societal factors and Stephan Haggard et al puts more emphasis on the leading role of the state.

This essay reviews some relevant articles on the score, and finally chooses a perspective to argue its theoretical implications to explain contemporary China’s economic development.

It is true that different political economy scholars have offered their own perspectives on the interesting issue of East Asia Economic Developmental model. It attracted many scholars attention due to its quite unique feature and as it occurred unimaginably against all the odds of the neoliberalist thinking which I would like to call it the Bible of the West’. To this effect, in line with Bruce Cummings’ argument, the essay, inter alia, will immediately take over one of the strong arguments: the perspective of the special existence of the cold war.

Brendan Da Costa (P.8) reviews that the context of the Cold War, during which much of East Asia’s development took place, seems to be particularly important to the emergence of the newly industrialized countries.  The security threat that was faced by the East Asian states during the Cold War helped to foster nationalism in these states and with it a commitment to a long-term transformation of the economy, in order to ensure the Communist threat was not realized. (Onis, P.116) States that were within reach of the communist threat were given special treatment by the US, amongst others, and this “enabled them to extract important advantages vis-à-vis the core…” (Ibid) These advantages were combined with continued expansion in the US market, acting as a recipient for increased East Asian exports, creating a favorable situation for development. (Brohman, P. 121)  As well as creating access to markets, the Cold War provided a more tolerant climate for the developmental state approach.  This meant that as long as the East Asian states remained firmly anti-communist in their approach, the rest of the western world turned a blind eye to the authoritarian regimes and market intervention approach. (Wong, p. 252)  The freedom and assistance allotted to the East Asian states during the Cold War was crucial in the emergence of the developmental state.

Similarly, it has been suggested that the developmental state was possible in East Asia due to the specific conditions that were present in the region at the end of WWII. (Onis, P.123) The first part of this context is resulting from the Japanese occupation of East Asian states during WWII.  One of the problems constraining development in Latin America has been the resistance from the traditional landed elites, who have been able to affect government policy to ensure it is not harmful to their privileged position, even if this restricts development.  However, the Japanese, as an occupying force, treated all citizens with equal disdain, and thus “the power of landlords was decisively broken…” (Kay, P. 31)

The return of East Asian states to the world economy was another factor that was crucial to development.  By reintegrating into the world market after the war, it gave East Asian states a relatively equal playing field from which to compete in, as other states were faced with full economic reconstruction.  “Hence…the timing of incorporation into the world economy appears to be crucial for the subsequent success of the East Asian states.” (Onis, P. 117)

In another line of argument, it has been argued that one of the primary reasons for the rapid economic development occurring almost exclusively in East Asia is that there are some unique aspects of Asian culture that make development possible.  It is the Confucian values that are most commonly associated with the developmental state in East Asia.  One of the Confucian values that is identified with the developmental state is the idea that “Asian societies have always been more concerned with the welfare of the group over the individual…” (Hood, P. 854) This is relevant in the developmental state context because it suggests a willingness to make personal sacrifices in order for the state as a whole to progress.  In this vein, as long as the state is making progress, individual losses of rights are not viewed as such an issue.

Another related Asian, Confucian, value that contributes to the phenomenon is the respect for a hierarchical society so that state authority “whether sanctioned by free elections or not, is respected and hierarchy is held to be natural and good.” (Ibid) This means that even if the methods that a head of state utilized to obtain the position are questioned, the respect for hierarchy will allow the citizens and the state to carry on with the goals of developmental state. ‘Confucian culture, with its emphasis on deference to authority and hierarchical human relations, contributes to the social stability and political order’ which by themselves are important factors for prosperity. (Kim, P. 1130)

For this writer, although he concedes that all arguments hold different amounts of water; the external economic injection takes the lion’s share. In other words; despite the fact that cultural values of the region like some Confucian elements contributed a lot for the model to more or less work smoothly, the American economic hegemonism and Japanese economic interference that resulted in technology transfer had unparalleled lasting contribution. It can be argued that the massive American economic input done for the East Asian countries can similarly elevate a country or a region, so to speak, in a totally different setting. The cultural element was not the leading factor but rather a subsidiary one playing a catalyst role. Unless we argue that the combination of the factors was a key one, culture on its own couldn’t have taken the East Asian economies to their existing level. For different causes and motivations, some of the East Asian economies were privileged by the Hegemon – in terms of basic but comprehensive capacity building that focused on the hardware of the region’s nations.

Similarly, the diffused Chinese economic development model seems to share several factors with the wide East Asian Developmental model. This, however, does not mean that all what has been reflected in the Korea, Japan, Taiwan, etc cases is repeating itself in mainland China. Neither has it meant the converse, though!

Nevertheless, the writer still argues that even for China’s contemporary economic development, the role of “foreign money” accompanied by foreign ideas and technology that has been entering China, makes the biggest contribution for its impressive growth. However, the way the money is entering the country is totally different from the support made for the East Asian countries the US economic hegemony. The US had special interests and motives to extend its help to the region’s countries. One cause was fear of expansion of communism. Another one was the timely entrance of the countries to the West market. It is important to note here that the WWII was difficult for some European countries but has also created opportunities to the East Asia countries that were active in the production sector for export. The US was directly opening its door to such countries in addition to giving/transferring technology to them.

Back to China’s issue of economic development behaviour; FDI in China especially since the Opening Up policy was launched, heavy government involvement in some selected industries, etc. played a great role in China’s fast growing economy. The export-led economy, luckily a common element from those of East Asian economic developmental model features, has also been the force not the culture in spite of the fact that 关系guān xì was/is being extensively used in the economy sector to scratch each other’s back.

In sum, I would like to conclude the essay by emphasizing on two main points that I argue are more leading factors for the developmental state model. These are the US massive economic assistance and the government’s position in the economy as a facilitator and regulator and in some strategic and selective areas an active participant.

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