East asia miracle and challenges Essay

The HPAEs are found to have nearly similar characteristics, among them being the wide variety in the ecosystem, social structure, and political regime, as well as great diversity in GDP (Ohno, 2002). This, in turn, allows them to enjoy high growth rates as well as an improvement in the income inequalities (Charles, Fontana & Srivastava, 2010). In addition to these characteristics, many factors have also contributed to this “miracle”, some of which is their success in producing policies that can sustain macroeconomic stability and the presence of a dependable legal framework that can encourage domestic and international competition.

Many East Asia countries have chosen to follow the authoritarian developmentalism regime (Watanabe, 1995, in Ohno, 2002) that has a top-down decision making done by an influential, economically literate leader with a supporting elite group. This regime is an economic nationalism in chase of material prosperity that emphasizes the external competitiveness under industrialization and export orientation. This “dictatorial” regime is only a temporary necessity to start the growth in the regional environment as it will eventually change into a more democratic regime, which has already occurred in Korea and Taiwan (Ohno, 2002).

Social policies such as education policies that focused on primary and secondary education will bring a positive difference when human capital is seen as an essential factor for economic growth. Hong Kong, Korea, Singapore, and Taiwan had already achieved universal primary education in 1965 and close the gap between male and female enrolments (Page, 1994). As a result, the literacy rate and cognitive skill levels were considerably above those in other developing economies. Firms will be able to upgrade the skills of their workers and mastering new technology more efficiently. The increase in educated workers thus contributes to the rapid human capital accumulation, which will help reduce income inequality.

The HPAEs were praised for their policies that were able to increase physical and human capital per worker and enabling the provision for efficient allocation. Furthermore, HPAEs lean towards international trade, making them open to foreign ideas and technology and the absence of price controls have led to a relative low-price distortion (World Bank, 1991, in Page, 1994). In other words, they are implementing an export push strategy in which countries will either adopt trade regimes that were close to free trade or mixed regimes that have reduced protectionism and largely free for export industries. Exchange rate policies were also used in order to support export growth.

The export push strategies proved to be successful among the HPAEs and are a promising strategy that can be used by other developing economies. The extent of the effectiveness of this strategy, however, will be dependent on the government's ability to combine cooperation with competition. For developing countries in East Asia, the formation of a production network which produces competitiveness and cooperative relations with neighbouring countries. The rise in trade and investment will then assist them in upgrading their industrial capabilities from low-tech to high-tech (Ohno, 2002).

Governments from the East Asian countries will have to create a market economy, simultaneously promoting international integration and managing its risks and lessening the negative aspects of growth after the social stability and policy consistency are achieved as basic conditions (Ohno, 2002). This can be done through regional cooperation in addition to policy efforts by individual countries. With the belief of open regionalism, the regional cooperation in East Asia not only not discriminate against countries outside the region, but also cooperation will be done through voluntary action and peer pressure, not by forced conditionalities or uniform deadlines (Ohno, 2002). Furthermore, in order to achieve the goal of industrialization, increasing intellectual aid on policy formulation and managing the negative aspects of growth, the economic cooperation needs to focus on human resource development, the building of infrastructure and promoting small and medium enterprises.

These overlap with the priority areas of assistance by Japan, the top ODA provider in East Asia. With the aim to boost and match the market-based economic linkage, Japan has mobilized its extensive tools that will improve infrastructure, human resource development, technical assistance and intellectual support for economic cooperation. High priority will be placed on assisting the self-help efforts of the East Asian developing countries to attain a suitable status in the region’s production network and eventually overcoming the social problems. In other words, the East Asian developing countries will be able to remove obstacles and create new trade and investment flows. The resulting economic prosperity and social stability in East Asia have in turn brought significant benefits to Japan since Japanese ODA projects have often been formulated in response to the needs of the private sector in Japan (Ohno, 2002).


As East Asian countries experience economic growth, they have however not had enough measures to control the rising social and environmental problem. On the social aspect, countries are facing the problem of an ageing population. When a country experiences economic growth, the standard of living will increase and thus increase the life expectancy. If the country is also facing the problem of a falling birth-rate, it will thus result in a greying nation. This will impact the development of the country since age is a factor which changes the distribution of valued resources in a society such as money (O’Rand, 1990, in Sheykhi, 2018).

For the developed countries, the elderly are expected to be enjoying personal and leisure activities. This is not the same for developing countries, where their basic livelihood is their main concern. With limited social welfare and health insurance, the individual financial resources play a critical part in improving one’s quality of life (IFA, 2001, in Sheykhi, 2018). Additionally, very few Asian countries have infrastructure sufficient to help their disabled and elderly people (Sheykhi, 2018). Modernization in many parts of Asia has caused a change in the family structure and ties, more mobility among the families, and the increase of employment of women, resulting in families being more segmented, and thus do not have enough time to invest in the elderly people.

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