Appendix PROBLEMS FOR GENERAL REVIEW - Home - …978-1-4419-8… · · 2017-08-29Appendix...

Appendix

PROBLEMS FOR GENERAL REVIEW

Problem I

(a) Based on the benchmark model, is it likely that Japan will have anotherhigh growth period, like the one in the period 1955 - 70? Why ?

(b) Why is it so hard for any economy to surpass America in per capita realGDP?

(c) Are the 10 year reces sion of Japan and the implosion of the Sovieteconomy similar events? Why?

(d) Latin American economies lost their share in world trade and they didnot manage to close the gap between themselves and America. Explainwhy these facts support the benchmark model.

Problem II

(a) Why is industrialization important for economic development? Illustratethis with the experience of Taiwan and Korea. What did they export inexchange for fuel and raw material before they industrialized?

(b) What elements of Confucianism might have prevented China to launchthe Industrial Revolution ahead of Europe? What in Confucianism maybe conducive to the catch up process ?

(c) Is trade equally helpful to growth for both East Asian economies andAmerica? Why not? Can an average Chinese gain as much from trade asan average Korean has gained?

353

354 Development in Globalized Environment

(d) If imitation is a 'contact sport', allowing the host country to learn fromthe home country through direct foreign investment, why should foreigninvestors be so naive, in exposing their secrets? If the host countrycannot learn from the foreign investors, why do developing economiescompete among themselves by granting tax holidays?

Problem III

(a) Do trade and foreign investment play the same roles for the developingSouth as for the developed North? Explain.

(b) Are such roles now the same as the roles in centuries past? If not , whatmakes the difference .

(c) Can opening to trade affect the rate of saving? If yes, is that effect oncefor all or long lasting?

(d) If learning is 'bounded' , is trade against the interest of the developingSouth? Why and why not?

(e) Both Korea and Singapore adopted industrial policy, but not similartrade policies? Why?

Problem IV

(a) East Asian economies have gained experience in exporting to theadvanced economies, especially America. Would they gain the samebenefit by exporting to India and Chinese Mainland instead ?

(b) Why were import control and foreign exchange control such stumblingblocks for Korea and Taiwan? How did reform unleash the growthpotential of Korea and Taiwan?

(c) Why did Young and Stokey believe that trade harms The South andbenefits The North? If you do not agree with them explain why.

(d) In what sense the recent East Asian concentration in electronics exportmay bring also some undesirable consequences?

Problem V

(a) Is the support of the state necessary for the emergence of large business ?Cite evidence .

(b) Is the presence of large business necessary for industrialization? Citeevidence.

(c) What are the influences of big business on product innovation?(d) What role has large business played in Korea, during the industrializa

tion under President Park, and during Crisis 1997?

Appendix: Problems for General Review

Problem VI

355

(a) Compare the views of Schumpeter and Arrow about the size of the firmandR& D.

(b) What roles have small and medium enterprises played in Japan, Koreaand Taiwan?

(c) Why did Korea nurture large business groups and Taiwan not?(d) How does industrial concentration make financi al crisis more

intractab le?

Problem VII

(a) Japan, Korea and Taiwan did not practice free trade like Hong Kong.Latin American countries keep protective barriers again st imports . Whydo their growth performance differ so much?

(b) Taiwan and Singapore carried out industrial policy, using instrumentsquite different from Japan and Korea. Discuss.

(c) Discuss the de-industrialization of Hong Kong.(d) What is the main concern in Singapore today and how is it handled ?

Problem VIII

Compare Japan and Korea regarding:(a) The role economic planning played(b) The ownership structure of large business(c) The relationship between small and large firms(d) The macro-economic performance over time

Problem IX

Both Thailand and Korea are affected by the Asian financial crisis.(a) Compare their experiences and those which affected the Latin American

economies.(b) Would such an experience have long term impact on these two

economies? Explain.(c) What growth profiles are expected for Th ailand and Korea,

respectively? Why?(d) Discuss the pros and cons of development with borrowed funds.(e) How can we explain that the difficulties faced by Thailand affect Korea?

356

Problem X

Development in Globalized Environment

Compare the economies of Taiwan and Chile regarding:(a) The initial conditions before the 'reform' (Taiwan around 1958; Chile

under Pinochet)(b) The nature of their economic reforms regarding trade , state ownership

and labor market(c) Discuss the current status of these two economies in trade structure, and

manpower(d) Explain the economic prospects of these two economies.

Problem XI

Discuss the economies of Hong Kong and Mauritius(a) What phase and what aspects of the two economies are comparable?(b) What are the main differences between these two economies?(c) Draw whatever inferences you can and discuss the policy implications

for Mauritius(d) Are there any lessons one can draw from these for economies such as

Sri Lanka, etc.?

Problem XII

One of the usual goals in economic development is the reduction of incomeinequality. Discuss this issue in the context of Singapore, where:(a) There is a sizable foreign population which numbered over 600,000 and

formed 18% of the total population in 1998.(b) This foreign population includes both (i) a large, revolving pool of

unskilled workers holding temporary working permits, and (ii) thehighly skilled group recruited as 'foreign talents' who may apply forpermanent resident status. In 2000 alone, 110,000 came to Singapore.Over the last 20 years, ~ of a million became permanent residents . Thatfigure is more than 10% of the resident population.

(c) By the estimation of the government, over the period 1994-96, this'foreign manpower policy' has allowed the economy to grow at 7.5%instead of 5.3%.

Appendix: Problems for General Review

Problem XIII (Institutionism)

357

A. According to North (1994, 1995, 1998), economic development shouldbe explained in terms of history and not neoclassical theory . He focuseson institutions, such as laws, custom, and organizations, which form therules of the game for agents, deciding their actions and effectiveness.Institutions vary not only among nations, causing differences inefficiency level and growth, but also over time, due to chance, politics,beside economic factors.

B. Many other economists believe, institutions can be either taken as given,or as objects of choice, or in terms of proxies (say, 'social capital') thatchange as functions of time, noise, or economic variables, towardefficiency.To assess both the effect of institutions and the cause of institutional

change, one may either compare the performance of entire economies as inNorth (1990) and various authors in Hayami and Aoki (1998), or proceedissue by issue, as in many chapters in Hariss, Hunter and Collins (1995) .

Like North, we wish ' to learn from history', beyond 'to learn abouthistory '. Discuss with the following sample of 24 issues from this book,whether and how has position A gone beyond B, to include political andother feedback mechanisms for making predictions or designing policy:I. The Industrial Revolution is the product of the European university

system and the British legislation on patents.2. History gave Japan the capacity to assimilate foreign technology fast.3. Historical linkage facilitated industry migration within East Asia.4. De-colonization after World War II, and the absence of a labor party in

America contributed to the rise of the Circa - Pacific supply chain.5. To defend against American corporate raiders, the Japanese government

helped the formation of the keiretsu system. Power devolved to the hiredmanagers, with fixed terms, unlike the founders of the Korean chaebolswho value dynastic pride over efficiency.

6. As wages rise, Europe relies on guest workers for services, and Japanshifts labor intensive industries abroad. Due to learning-by-doing,technology transfer to neighboring lands is easier in the latter case .

7. Korea controlled the heavily indebted chaebols with directed credit inshort term loans. As the chaebols grew, they became ' too big to fail'.

8. In their industrialization, the PRC, Taiwan, South Korea and Vietnamare more or less alike, with North Korea being the 'odd man out' .

9. Relative to America, the difficulty of attracting migrant entrepreneurs inJapan and other East Asian economies makes direct foreign investmentimportant in technology-intensive industries.


10. East Asia exported garment to America and the Colombians exportedinside the Andean Group : the former have learned much, and the latterrelatively little.

II. From the shoemakers in Taiwan to the Eng Hardware of Malaysia,foreign subcontracts made traditional SMEs into niche-market players.

12. Exchange rate reform unleashed Korean entrepreneurs for growth.13. To some Korean economists, the political need to legitimize the coup

explains the costly promotion of heavy industries by Korea under Park,but not by Taiwan under the KMT.

14. The organization for planning may explain why Korea financed heavyindustries with foreign borrowing but Japan did not.

IS. Taiwan's consistent industrial development came from improvisation.16. For economies with surplus labor, setting up export zones meets less

resistance from the entrenched interests than liberalized trade.17. Export Zones were set up in Taiwan to emulate Hong Kong, but they

also exhibit the advantages of Industrial Parks.18. Emulating the system of Taiwan's Kaohsiung Export Processing Zone ,

Mauritius succeeded to become an export platform for foreign investors .19. The rule of law made Hong Kong an economy for trusted middlemen ;

by their intermediation, the PRC's village industries started to export.20. With their rule ending, the British eschewed industrial policy in Hong

Kong, causing now a de-industrialization that Singapore has avoided .21. Currently, to produce offshore, Hong Kong invests in the PRC, but

Korea invests in Vietnam or other non-Chinese economy.22. For political viability, both Singapore and Malaysia had to adopt their

respectively policies: 'meritocracy' for one, 'affirmative action ' for theother, with Singapore's per capita income much higher than Malaysia.

23. The employment imperative drives Singapore's search for high growth;Singapore's labor requirement decides its future population mix.

24. Lacking both resources and home market, Singapore persuaded its laborto adopt compulsory arbitration, and keep the economy strike-free.

Problem XIV (A Project on Argentina)

In Chapters 1 and 2, it is explained how Argentina lagged behind bothAmerica and Japan but not quite why, in particular, for the historicalArgentina (a) what could have been done and (b) what was actually done inoutputs , borrowing, investment, and so on. This book supposedly offersprinciples and evidence relevant for various time and locations. Try toaddress (a) and (b), based on the short list of facts and events below. [Muchof this information came from Cardoso (1987), Diaz-Alejandro (1970, ch. 1;1988, ch. 12), and di Tella and Dornbusch (1989).]

Appendix: Problems for General Review 359

I . In 1895, Argentinean per capita income was,a) at the level of Belgium, Germany and Hollandb) ahead of Austria, Italy, Norway , Spain, Sweden, and Switzerlandc) below Australia, America and Canada, among the newly settled

countries: the Australian/Argentina ratio was slightly higher than2: I in 1895 and slightly lower than 2: 1 in 1998 (The ratio ofAustralia to America was 115.91% in 1895 and 74.24% in 1998).

2. In population, Argentina had 2.47 million in 1880, 4.92 million in 1901and 36 million in 1998, relative to 2.24 million in 1880, to 3.83 in 190Iand 19 million in 1998 for Australia. Australia has a more restrictivemigration policy than Argentina. Weak labor market linkage existedbetween Argentina and Italy as well as Australia and the Briti sh Isles .The average real wage in Northwestern Europe was probably higherthan Italy, and Italians migrated to Australia, America, and Argentina.

3. Geographic isolation mattered: the Argentinean debt crisis of 1889 wasended by the invention of refrigerated shipping of beef export s.

4. Up to 1900, Argentinean exports responded quickly to the changingworld market: hides in the 1840s, grain in the 1880s and frozen beef inthe 1900s.

5. The constant reliance on foreign borrowing often placed the economy ina conundrum. When debt service charges cause massive current accountdeficit, the government is forced to produce trade surpluses throughdevaluation. But devaluation raises the foreign debt burden which isdenominated in foreign currency and encourages capital flight. Toservice debt, the government often relies on inflation for financing. Butthat erodes export competitiveness and hurts people with lower income .

6. With macro-economic instability and stagnation in growth, theimpoverished labor turn s militant and politicized. Turbulent labormanagement relation s discouraged investment and technologicalrenewal. The rise of Peronism made reform even more complex.

7. The alienation of the educated youth caused brain drain and urbanterrorism and the latter led to right-wing repression , which furthercomplicated development.

I. To economists, 1895 seemed to be a highpoint of the Argentineaneconomy. Now without either any debt crisis, or a single military junta,Australia could not keep its lead over America over the 20th century, canone seriously expect Argentina to keep step with Germany in per capitaincome?a) Can that be done by producing more of the same, through

accumulation?b) Can that be done through technical progress spearheaded by home

grown R&D?


c) Can that be done through technology diffusion via trade, in primaryexports?

d) Can that be done through technology diffusion via trade, inmanufactured exports (like Japan - keeping in mind that Japansurpassed Argentina in GDP per capita only in mid 1960s)?

e) Can that be done through technology diffusion via trade, in locationbased manufactured exports (like Singapore which is located astridethe sea lane between such and such)?

II. Discuss the following .a) Primary products were important in the exports of both Taiwan and

Malaysia. Compare their development with Argentina.b) Military coup, foreign borrowing and IMF rescue form the shared

experience between Korea and Argentina. Compare the differencesbetween these two economies.

c) The recent financial crisis in Argentina caused 18% unemployment,pushed 15 million people below the poverty line, left somegovernment workers unpaid for five months, and 132 billions offoreign debt delinquent in interest payment. In comparison, afterWorld War II, the Japane se per capita income was at 45% of its prewar level and Japanese technology lagged behind America andEurope. What does it take for Argentina to have a rapid and fullscale recovery and then full fledged growth (like Japan)? Why?

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INDICES

A Note for Users of Our Indices

For the convenience of readers, we have supplied an Author Index besidethe Bibliography. Additionally, the subject index is separated into a SubjectIndex - General and a Subject Index - Structured Comparisons.

This volume is about fa cts, from which conclusions are arrived at. Factsgain meaning, only when they are selected and arranged in some fashion;conclusions emerge, after appealing to certain 'theories' (or hypotheses) ofvarious degrees of formality . These selection and theorizat ion are closelyrelated to binary groupings, between individual or groups of economies; thedifferences in various aspects shown in the comparisons suggest causes andeffects, as perceived by the author. For interested readers, these appear inthe Index - Structured Comparison for reference.

This volume discusses the development process, and the East Asianexperience. Our book may also be useful to other readers interested only insome particular and related topics, for example, the effect of 'export zones'.From our Index - General, the entry Export ZoneslIndustrial Parks thenprovides not only pages in this book relevant to the topic, but also names ofparticular economies which are relevant, Taiwan, Hong Kong , Korea, PRC,Malaysia and Mauritius. From this list of six economies, the reader can go tothe Index - Structured Comparisons and find the following related items :A) The Bangladesh-Mauritius comparison: for the economy as a whole,

why has Bangladesh gained less than Mauritius?B) The Malaysia-Mauritius comparison: why has the export zone generated

backward linkage in Penang, Malaysia, but become merely an enclavein Mauritius?

373


C) The Mauritius-Taiwan comparison: why export zones in Taiwan appearto be more valuable to the economy than their counterpart in Mauritius?

D) The Korea-Taiwan comparison: why did export zones play importantroles in the development of Taiwan but not Korea?

E) The Hong Kong-Taiwan comparison : if the export zones of Taiwanaro se from emulating Hong Kong, why have high tech industriesdeveloped better in Taiwan than in Hong Kong itself?

F) The Singapore-Taiwan comparison: if for high tech industries, theadvantage of Taiwan over Hong Kong is solely due to the fact thatTaiwan's export zones also serve the function of industrial parks, whyshould Taiwan's Hsingchu Science-based Industrial Park also become abetter incubator for start-up firms in high tech than the Singaporeanindustrial parks?

G) The PRC- Taiwan comparison: with its own industrial parks, is PRClikely to replicate the success of Taiwan in high tech industries ?

Author Index

Aghion , P. 33, 156Alchian, A. A. 138Allen, F. 180Amsden, A. H. 130, 155, 195,200,201.

202 ,204,206,209,219,237,248,333

Andaya, B. W. 274Andaya, L. Y. 274Antonio, E. T., Jr. 326Aoki, M. 357Applebaum, R. P. 108Arrow , K. 1. 92 , 165Auerswald, P. 92Barnes, G. L. 193Barro ,R. 14.29,44,79Basu, K. 33Baumol, W. 1. 14,267Bauer, 1. 284Bewley, T. F. 139Bhagwati,1. 7. 21,182, 184, 205,237Boeker, P. H. 9Borrus, M. 334Bourne, D. A. 123,124Cardoso, E. 358Chang, H.-J. 179, 197,201,202,203Chang, Y. F. 212Chau,L.C. 251.154,255,256Chen, S.-H. 103,229Chen, T.-1. 230 , 232, 233, 243

Cheng, Lu-lin, 248, 336Cheng, T.-Y. 242. 243Chia, S.-Y . 278Chng M. K. 290Choi, B.-S . 199,200,201, 203Chu, W. W. 130,248Chu. Y.-P . 132Clark , C. 22Clemhout, S. 92, 144, 147Coe , D. T. 184Coleman, G. 90, 110, 118, 119, 120, 121,

157Confu cius 65Crown, J. 90,110, 118, 119. 120, 121,

157Cyert, R. M. 206Dabee , R. 321David , P. A. xvDeLong, J. B. 24Deyo, F. C. 293,344di Tell a, G. 358Diamond. J. 313Diaz-Alejandro, C. F. 358Dicks. A. R. 317Doner, R. 293Dornbusch. R. 86, 358Doshi, T. 8Embong, A. 309Engels , F. 132

Indices

England, J. 25 1, 256, 259Enos, J. L. 212Ericson, R. 138Ernst, D. 21Fei, J. C. H. 132Feldstein, M. 169.Fields, K. 73, 201, 203, 206, 240, 24 1Findlay, R. E. 7, 29, 255, 278, 320Fischer, S. 86Fransman, M. 96, 248Friedman, M. 25Furman, 1. 22 1Gale,. D. 180Galor, O. 343Gerschenkron, A. 17Gomulka , S. 10, 18Greenaw ay, D. 321Grossman, G. 333Hadley, G. 267Halberstam, D. 210Han, W.-K. 70Hang, C. C. 9 1, 293Harriss, J. 357Hayami, Y. 357Helpman, E. 184,333Hershberg, E. 293Hikino, T. 152,202, 205, 238Hobday, M. 90, 96, 150, 211, 237, 248,

283, 293Hoffmaister, A. W. 184Hong, W. 218,248Hopkins, K. 250, 253Horioka, C. 169Howitt, P. 33, 156Huff, W. G. 238, 253, 277, 281, 283Hui, W. T. 290Hunter , J. 357Huntington , S. P. 329Husic, F. 40Ip, D. 264, 325Itoh, M. 29, 92, 139,212, 282Jeremy , D. 271Johnson, M. 310Jomo, K. S. 306Jones, C. I. 330Jones, L. P. 196, 198,238. 241, 306.316Jones, R. W. 90Jorgenson, D. W. 157Kato, T. 230.Kauffman, S. 92Kemp , M. C. 139, 141, 267, 332Kennedy,P. M. 329

375

Kierzkowski, H. 90Kikkawa, T. 152. 202, 205, 238Kim, J-H. 31, 157,1 59, 197, 201, 207,

209, 210,24 1Kim, 1.-1. 24, 155Kim, K. 30, 205, 240Kim, L. 193, 194, 196, 199, 201, 202,

109, 211,213, 352Kiyono,K. 29, 92, 139Knott, K. 123Koe, A. T. 290.Kojima, K. 73, 110, 112, 114Komiya, R. 117, 157, 204,212, 323Kong L. 103, 159,251 , 256,259Koopman s, T. C. 23Krugman, P. R. 22, 53, 155, 288Ku, Y.-H. 230, 232, 233, 243Kuo,S . W. Y. 237,243, 244Kuznets, S. 17,298LaB, S. 196,202Landes, D. S. XV, 76Lau , L. J. 24, 155Lau, M.-L. 16,24,46,5 1, 224, 314Lau, P.-K. 261Lauridsen, L. S. 184, 187Lee, J.-W. 202Lee, K. Y. 96, 187,275, 276, 277, 278,

280,283,288,340Lee, T. Y. 283, 288Leipziger, D. 30. 205, 240Lever-Tracy, C. 264, 325Levy, 8 .90,248Lewis, 8 . 333Lewis, C. M. 357Li, J. 1. 248Liang, c.-Y. 157Lim, K. L. 290Lim, Y. Y. 307Lim, L. 278Liu, D.-N. 103, 229Liu, P-W. 26 1Lobo,J.92Low, L. 283, 288, 306, 341, 342, 343Lucas, R. E., Jr. 10,25,28,39,40,79,

111,1 84,214Mahathir, b. M. 62, 184,274,307,309Malraux, A. 71Mansfield , E. 40March, J. G. 206Matsuyama, K. 84, 238Meyanathan , S. D. 248Meyer, W. H. 8

376

Miyajima, H. 29, 72Moav, O. 343Mody, A. 219Morawetz, D. 87, 157Morishima, M. 59, 63, 79, 212Mukhopadhayya, P. 348Munter, R. 248Murphy, K. M, 338Naughton, B. 260Nermuth. M. 122, 124Newbery, D. M. G. 82Ngiam, T. L. 341, 342, 343North, D. C. xv, 357Ohkawa, K. 40Okuno-Fujiwara, M. 29, 92, 139Owen, N. 254, 256Ozawa, T. 73, 110, 112Pacey, 333Pang, E. F. 278Park, C. H. 197Park, W. H. 212Perkins, D. H. 31,1 57, 159, 197,20 1,

207,209,210,241,307,309Perry, M. 103, 159, 251, 256, 259Phelps-Brown, E. H. 251, 256, 259Prebisch, R. 82Prescott, E. C. 165Pursell, G. 198Radner, R. 16Rahim, L. Z. 309Ramsey, F. 157Ranis, G. 25, 22 1, 224, 345Rao, V. V. B. 290, 343, 345,348Rapoport, J. 40Rasiah, R. 136, 322Ray, D. 33, 156Rear, J. 253Rhee, Y. W. 198Rhee,J.C. 200, 201, 202,203Richter, R. xvRodrik, D. 6, 202, 219. 237, 248Romer, P. M. 10,28Romero, A. 40Rosovsky, H. 40Ross-Larson, B. 198Roy, J. 138Saito, M. 19,43Sakong, I. 196, 198,205,238,241, 306,

316Sala - i-Martin, X. 14, 29, 44, 79Samuelson, P. A. 49, 86Saxenian, A. 326


Schive, C. 131Schultz, T. P. 343Sen, A. K. 345, 346Shell, K. 10, 28, 92, 139Shieh, G. S. 25, 96, 157,248Shin, S. P. L. 258Shleifer, A. 338Simon, H. A. 331Smith, A. 137Smith, D. A. 108Smith, W. 73, 301Smith, H. 229,234Solow, R. M. xviii, 16,28, 159Soon, T.W. 292Stapleton, D. H. 271Stem, J. J. 31,1 57,159,197,201 ,207,

209,210,241Stiglitz , J. E. 82, 184,221Stokey, N. L. 93Stoever, W. A. 292Summers, L. H. 24Sung, Y.-W. 261, 262Suzuki, T. 180, 212Suzumura, K. 29, 92, 139Tan, K. Y. 310Tanzer, A. 120Thorn, R. 338Thorbecke,E. 207, 258Tobin, J. 10Tolstoy, L. 338Tonkay, G. L. 123Tonzon.J. L. 159, 283Tracy, N. 264, 325Tsiang, S. C. 240Tung, A.-C. 159, 229, 258Uchida, H. 61Uchupalanun, J. 120Urata, S. 212Van, H. P. 29, 31, 96, I II , 122Veblen, T. 18Villani, E. 40Vishny, R. W. 338Wade, R. 155,21 9,237,240Wagner, S. 40Wan, H. Y. Jr. xv, 25, 29, 30, 31, 60, 63,

68, 92,96, III , 122, 133, 138 144,147, 180,184, 197,207, 230,253,258,332, 16, 24,46, 51,224, 258,269, 314

Wang G. 283Weber, M. 79Weil, D. N. 343

Indices

Weisman, 1. 269Wellisz , S. 7, 255, 258, 320Wong, P.-K. 347. 348Wong, S.-L. 252Wong, W. K. 180Wong , v..c. R. 261Woo, W. T.307,309Woo-Cummings, M. 232

Subject Index-General

A

Accumulation is enhanced by openness157

Act Against Accumulating Illicit Wealth(Korea) 198

Affirmative action 62, 299, 309-10Africa 93Agglomerative externality 108; See also

'Coordination cost of globalizedproduction'

Agricultural revolution : a pre-requisitefor industrialization? 84

'AI Baba ' enterprises 306America See 'United States'American market: largest in size and

relative open 4; See'Andean group North America comparison'

Andean group, the See 'Andean group North America comparison'

Andean group - North Americacomparison, exacting standards helplearning 88

'Anti-orthodox position ' , thelPosition ofKim and Lau as well as Young 15563

Argentina: initial income more than anyAsian economy 50; culture affinitywith Europe! U. S. 51; incomerelative to neighbors 53; growthpattern similar to Australia, Brazil ,Sri Lanka, Ivory Coast;industrialization not sustained 86;historic al background 358-9; Seealso'Argentina-Australiacomparison' , 'Argentina-Germanycomparison ' , 'Argentina-Japancompari son', 'Argfentijna-

377

World Bank, 1998, World Bank Atlas ,World Bank, Washington .

Wright , P. K. 123, 124Yang, T.-H. 230Yeoh,B. 103, 159,251,256,259Yoo, J. H., 31,157,159, 197,201,202,

207,209,210,241Young. A. 6, 24, 25, 29, 93.155,232,

248, 288

Singapore comparison", 'Argentinacompared to Korea and Cyprus '

Arrow 's Law 138Asset bubble 183ASEAN-3 (Malaysia. Thailand and

Indonesia) 299; Opening precedesindustrialization! growth beforestabilization 303-5

ASUSTeK 334

B

Bangkok Internat ional Banking Facility184, 187

Bangladesh (or Bangla Desh) 319;Korean and Hong Kong investmentin 321; See also 'BangladeshMauritius comparison'

Basic needs! Health and basic education,necessary for growth 340, 345

Bayan Lepas 322Belgium 61Benchmark model , the I Benchmark path,

the: 2, 5, assumptions andimplications 9-14 ; hypothesis testing for validity 17-21; anapplication (See 'Trade,differentiating the five effects ') ;Limitations (also see 'Twin megaevents of the 20th century ') 21-22;realism - qualitative assessment 21;realism - quantitative assessment34-44; digressions 23-32; differencefrom the Mansfield formula 40

'Big Deal' , the (in Korean reform) 207Big push 153-4, 338Bounded learning 93

378

Brazil: reform under Cardoso 9;similarity with Argentina 55; notoutward-oriented 97

Bridgestone 121Britain See United KingdomBritish machine-made fabric eliminated

its Indian rival 333Bumiputra 305-7Bureaucracy/Bureaucratic red tape 149,

the example of pre-reform India 138Business groups - pre World War II

Japan See 'Zaibatsu'Business groups - post World War II

Japan See 'Kereitsu'Business groups - Korea See 'Chaebuls'

c

Capital marketlLending and borrowing :nature of 168; futures market 183;thinness of 183: incompleteness183; lacking rational expectation s184; liberalization and crisis 192-4

Capital mobility See 'Capital marketliberalization'

Capital-deepening bias of human capitalformation, the 161-3

Catching up 4 - 44; Germany withEngland 18; incompleteness 16,41

Cause for growth : export or accumulationSee'Accumulation is enhanced byopenness' , 'Labor utilizationintensified by trade' , ' Anti-orthodoxposition, the' , 'Trade, differentiatingthe five effects' , 'Tradedevelopment nexus, the', 'Tradehelps industry upgrading','Learning-by-exporting' , 'Longbenefit lag of Learning-byexporting ', 'Long benefit lag ofInfrastructure investment', 'Capitaldeepening bias of human capitalformation'

Central place 268-9Central Providence Fund (CPF) 284, 286,

290, 295Chaebuls 72, foreign borrowing-the root

of crisis 195, 199; heavily leveraged198,207; backed for foreignprojects 199; in trouble during Crisis1997 200; linkage with General


trading compan ies (GTCs) 203;crowding out SMEs 205; ' too big tofail' 206-7; restructuring after Crisis1997217

Chang, John 194; devaluation 197Chartered: as leading patent holder 228Chang, Morris of TSMC 326Chiang Kaishek: reform in Taiwan 18;

presiding Taiwan's growth 245;persuaded to risk brain drain 294

Chile 75; See also 'Chile-Taiwancomparison'

China See 'PRC'China - Europe comparison (Ancient

times) 67China Circle 's role in U. S. - Japan

competition in electronics 334Chile 51; reform 75Chinese Diaspora See 'Overseas

Chinese 'Chun: repression 194,207-8; reform of

chaebuls 206-7 ; leadership 213Circa-Pacific trade flow 111Clemhout and Wan results, the 144-9; the

structure of optimal policy may becomplex 148; optimal policy may benon-unique 149

Colombia 87Colonial environment 72Comparative advantage : 95, 95, 101, 107;

initial 25,47,88; evolution 47;creat ion of 54,63; dynamic gain in54

Competitive asset See KnowledgeCapital

Confuc ius / Confucianism in practice 5969: as a moral philosophy 64-6 ;parallels across cultures 66; as anImperial philosophy 67; as adefining characteristic for East Asia64; weaknesses/strengths fordevelopment 64-69;discipline/decorum/erudition 64;form perverts substance 68; scholarinventor separation 67 ; rote learning68; preference for equality 339

Contagion, theory of 180Convergence club 14, 16Convergence Hypothesis 14Coordination cost of globalized

product ion 88-90Coordination failure 143

Indices

Cowperthwaite 255Creative destruction 9, 22; the

Volkswagen vs. the Trabant 9,22;Soviet Union economy 156

Credit chain 181Crisis 19972, 167-87; temporary reverse

to catching up 21; impact on Korea28; partly a result of the catching up167; avoidable 167; relationship toforeign debt and terms of tradevolatility 168

Crisis 2001 (or Recession 2001) 329-30Cronyism 177Cross subsidization 199,207,213; See

also 'Twin Pillars of industrialpolicy, Korea under Park '

Cultural affinity: Argentina with EuropeIU. S. 51; among East Asians 73-4

Cyprus 34, 41

D

Daewoo: taking over Shinjin 198;collapse 200; foreign buyout 212

Debt : burden/crisis 152-5; nature andbankruptcy 168, 182; politicaleconomy of 176-80; See also'Foreign debt'

De-colonization 3Development success : definition , 4;

socio-political environment 3-4;technological environment 3-4

De-linked 5Demographic factor : result of female

labor participation 26; cause forlabor shortage See Japan invests inTaiwan

Deng compared to Mao: reform in thePRC 19

Dependencia School 9Directed credit 191, 199,201,207; See

also 'Twin Pillars of industrialpolicy, Korea under Park'

Direct foreign investment: as channel fortechnology transfer 1\6,121, 123,130, 135; as alternative to foreignloans in Malaysia 185; little used inKorea (like Japan after World WarII) 209, 211; much used inSingapore 212; served as source oftechnology in Taiwan 234-5; by

379

origin, in Malaysia 308; See also'Japan, industry exodus', 'Japaneseinvestment in Taiwan ' , 'Foreigninvestment', 'multinationalcorporations'

Distort ion 154Dollar-denominated debt 176Dutch Disease 16, 300Dynamic externality 164

E

East Asia 2-47; growth following policychange 18; high investment 24;virtuous cycle 25; high female laborparticipation 25; East Asian Five 55,59; shared initial conditions 61-4;See also 'Confucianism', 'East Asia- West Europe comparison' , ' NIEs ' ,'Repl icabilily '

Electronic products : replacement demanddominates expansionary demand330; high income elasticity 330;prominent in East Asian export mix330; recession triggers industrymigration 331; favored product inEast Asia 332; product cycle woes :PRC displaces electronic jobs inHong KonglJapanlPenang, Malaysia331; See also 'China Circle 's role inU. S. - Japan competition inelectronics'

Emulat ion 16; in East Asia 59,65; Japan ,as an object of 70-3 ; via the contactof trade/investment/migration 109IO

Engle's Law 82, 83, 94Entrepot 251; economics of 266-8;Export mix, upgrading in Taiwan 83Export pessimism 4,21,82, 154Export platform 156Export promotion, 26; in Korea 30'Export quality' 94Export zones/Industrial parks: various

advantages over laissez faire 114;Kaohsiung Export Processing Zone,Taiwan 114-5; Hsinchu Sciencebased Industrial Park, Taiwan 236Masan Export Zone, Korea 244;Special economic Zones (SEZ),

380

PRC 244 ; an imitation to HongKong 258 ; industrial parks ofPenang, Malaysia 307, 22;emulation of Taiwan in Mauritius320-2,327

Exporter benefits from tough markets:garment industry 88; bicycleindustry 120; Koreans learned fromO. E. M. sales to the U. S. 352; Seealso 'Hyundai: entry into the U. S.market'

Externalities 7, 139, intern alization of144, 154, 164; dynamic 165

F

Falling back / falling behind 12, 16Famine, checked by independence and

democracy 346Fanuc 74Federal Flour 308Female labor: shaping comparative

advantage of the NIEs 25; Taiwan'scase : importance to economy 25 ;reduction of birth rate 26; socialstatus and marriage 115; structuredlifestyle 115

Female empowerment 346Financial market See Capital

market/Lending and borrowingFinland 30 ; arctic agriculture 38;

concentration in output mix 133Footwear: product cycle woes 336Forced saving, Soviet 6Foreign aid 12; U. S. aid 46 , 114Foreign borrowing See Foreign debtForeign debt : cause for crisis 168,200;

versus domestic debt 152, 177;unsupportable after devaluation inKorea 199-200; absence in Japan209 ; as substitute for foreignownership in Korea 211; notburdensome in Singapore andTaiwan 213; Japan-Koreacomparison 218

Foreign investment 7,27; within andacross cultural boundary 73;relatively avoided in Korea 209 ,211-2; attracted by Taiwan 230 ,234 -5; followed foreign buyers toHong Kong 253 ; flocked to China


through Hong Kong 259-61 ; Seealso 'Multinational corporations'

Foreign joint venture 61Foreign labor See 'Guest worker'Formosa Plastics Group , relation with the

government 241FragmentationlFragmented production

88-90 ; See also 'GeneralInstruments' , 'The Limited'

Fundamentals 177, 186; conditions -lowelasticity of substitution, high ' homegood preference 173; successfulcatching up 176; housing boom 176;global versus country-specificfundamentals 182

G

GATT 325General Instruments 90Germany: catching up with England 18;

economic miracle 39; See also'Germany-Taiwan comparison'

Giant Manufacturing Company ofTaiwan: gained productivity viaexport 157 See also 'Giant-Schwinnsaga, the'

Giant-Schwinn saga , the 118-22Globalized production (or Globalization)

4, 90; in garment industry See 'TheLimited'; in bicycle industry Ill ;welfare impact: national advantage /world welfare 332; See also'Fragmentation '

Goh Chok-Tong 309Goh Keng Swee 278Governing the market 155; in Park 's

Korea 195, 197-200Government failure 6, 7, 92, 164;

bureaucracy 138, 164; corruption138,164

Government, the role of 137; consistentwith Laissez Faire 139; guaranteeagainst monopoly 139; provision ofpublic goods 139; governing themarket in Korea! wary coexistencein Taiwan/ laissez faire in HongKong 237

Government-linked corporations 288Growth accounting 28-31 ; See also

'Anti-orthodox position, the'

Indices

Growth - equality relationship 339-43;'basic needs' helpful to growth 340,345; 'welfarism blunts motivation '341-2 ; with rapid growth, equity notsynonymous to any instantaneousincome distribution 343; growthmay affect family structure, henceequality measure 343; acceleratedgrowth (like Singapore) may causemeasured equality 343; relativeimportance for Malaysia andSingapore 347; See also 'incomedistribution'

Growth theory 16,28,29,33;endogenous 139

Guest worker 88, 130; Japanesereluctance for 112; in Singapore282,284

H

Haddon-Cave 255Handok Company 30Hard Disk Drives (HDD) industry :

Singapore as the principal producer293 ; product cycle woes, high wageled to industry exodus 293, 347-8 ;high wage rewards high skill 347;skill to produce new varieties Itohelp MNCs train the production ofold varieties elsewhere 347;

'Heavy industry trap' , the 208-9Heavy Chemical Industry (HC!) Drive,

the: in Korea 194,200; cause 201,203; implementation 204-5; effect205-8; See also 'Chaebuls': inTaiwan 230-2

Hewlett-Packard 278Homogeneity (social) 61-4; conducive to

human capital formation 62;enhancing social cohesion 63;counterweight to East Asia's lack ofa science-technology tradition 63-4

Hon Hai: as leading patent holder 228Hong Kong 6, 8, 18,20,44,249-71: size

does not decide all, nor does history249-50 ; entrepot role - preconditions for development 251-3;migrant capitalists/refugee workers252, 270 ; efficient textile mills asspearhead to industrialization 253-4,

381

270; adaptability 254-5 ; deindustrialization 258-60 ; worseningincome distribution 259, 262; HongKong-PRC re-integration 260-2;Chinese gradualism vs, Germantrauma 260-1; various roles inChinese development 260-2; futuredirections 262-3 ; special features :currency board, IndependentCommission for Anti-Corruption,etc. 265; basic needs but little safetynet 339-40 ; See also 'Hong KongMacao comparison ' , 'Hong KongSingapore comparison ' , 'HongKong -Taiwan comparison', 'laissezfaire of British Hong Kong', 'HongKong's contribution to China

Hong Kong's contribution to China:Before 1978 - market for food/water251-2; after 1978: principal entrepotfor export to the U. S. 259 ;headquarter town for foreigninvestors 258; 'the growth pole' by division of labor with the PearlRiver Delta, via industry relocation259-61 ; principal source of foreigninvestment funds 261-2; supplier ofmanagerial personnel I technologyin hospitality industry 262-3 ;intermediating activities 269; Seealso The Limited'

Human capital 6, 8, 25, 81, 90-2;formation 24, 30, 60-6; rote-leaningcompared to rabbinical debate 68;historical dynamics 76; science andresearch manpower 9 I; R&Dspending 91

Human Development Index (HOI) 345;estimation for Taiwan 345

Hyundai 80; entry into American market31, 159, 165; subsidizing U. S,buyers 94, 199; pressured to entershipbuilding 198; 'crisisconstruction' 202; as leading patentholder 228

I

Iceland 34Immiserization/immiserizing growth 323,

334

382

Import substitution 26, discredited 85,117,154; selective protection (anarrow moving band) 98; whyprotection may not nurture desiredlearning 100-2; See also 'Importsubstitution regime' , 'Outwardorientation vs. import substitution'

Import substitution regime: 97; in Korea194; in Taiwan: first stage 235-6 ,240; second stage 235-6, 243, 248

Income distribution 339; distribution ofincome profiles for a growingeconomy 347; inapplicability ofusual equality measures overprofiles 347; ambiguity of thedistribution concept over a changingpopulation 347

Income gap: widening 3; narrowing (Seealso 'Catching up') 4: Cases ofnarrowing: West Europe after theMarshall Plan, 4; East Asia 3, 5

India : de-linked 9; reform 9, 75; notoutward oriented 97; bureaucracy inthe pre-reform era 138; repcri, 319;use of Article 35 vs. Japan 324; lowliteracy as a handicap for growth(Sen) 345; See also 'Britishmachine-made fabric eliminated itsIndian rival', 'India-PRCcomparison'

Indonesia: industrial policy, politicallymotivated 177; regime changeduring the Crisis 179

Inductance Hypothesis 180-1Industrial Coordination Act (of Malaysia)

307Industry-launching in Japan: encouraging

first-mover 150; containing freeriding of late-comers 150; grantingtemporary monopoly 150; avoidingboth government failure and marketfailure 151; justification forgovernment intervention 164

Industry-launching in Korea See 'Korea:Heavy Chemical Industry Drive '

Industry-launching in Taiwan : the Stateas the first-mover 159, 230, 235

Industrial policy 92, 98,137,164;Japanese 53, 102-3, 151-3; theory of139,154; concepts reconsidered 241

Industrial Revolution 63, 68;


Industrial ization 8,50,81,82; Japanesere-industrialization 18; in East Asia20; in the U. S. and Belgium 61; inJapan 69, 73, 78; crucial fordevelopment 82; advantages ofindustry over primary goodproduction 82-4

Industries : labor intensive 26Industry upgrading 81; skill upgrading

facilitated by trade in Korea 30;caused by improved satelliteindustries in Taiwan , Singapore 956; triggered investment abroad inJapan (See Japan invests in Taiwan);See also 'Trade helps industryupgrading '

Industry targeting: in Korea 200-2, 204,206; in Japan 205

Infant industry 53, 108Information efficiency! Informational

efficiency 138, 154, 168Infra-structure investment, long benefit

lag of 159InstitutionslInstitutionism xv, 357Intellectual property right 68; See also

'Patents'International Monetary Fund (lMF) 155,

185; rescue program 185; rescue ofKorea 195; for Korea: standbyarrangement, early 1970s! 'The IMFCrisis ' , 1997200

Ireland 34Israel 34Intermediation 256, 263, 269Introduction of new products 25, 111Industrial Technology Research Institute

(lTRI) of Taiwan 119

J

Japan : impact of 2; growth deceleration(maturation or malaise) 4, 23, 26;Korean War, effect of 18; WorldWar II, effect of 19; MeijiRestoration 43; economic miracle39-47; trend acceleration 40 ;creating comparative advantage - byadapting electronics 54; byincremental improvement 63;lacking indigenous science tradition61; difficult to attract migrant

Indices

inventors 61; contribution by foreignjoint ventures 61; first of the Asiansto industrialize: historical andgeographic causes 69-70; catalystfor Asian industrialization: rolemodel/colonialruler/investor/contractor/middleman70-3; Intra-East Asian co-operationand rivalry 73-4; control of strategiccomponents (See Shimano);reluctance to use migrant labor 112;Industry-targeting 152; industrialexodus due to rising wage 197; dueto recession 350; motivation forindustry targeting 204-5;competition from PRC 331; See also'Argentina-Japan comparison ','Japan-Korea comparison ', 'JapanTaiwan comparison', 'Japan-U. S.comparison ', 'Japanese investmentin Taiwan', 'Japanese industrialpolicy ' , 'China Circle 's role in U. S.- Japan competition in electronics'

Japanese industrial policy : range ofpurpose 151; trial-and-error nature151; exchange information duringconsensus building 151;administrative guidance 152;constraint after entry into GATT152; See also 'Industry-launching inJapan '

Japanese investment in Taiwan 112-6;push factor : labor shortage 112; pullfactor : investment incentives andexport zones/industrial parks 114;cultural factors 114; effect ontechnology transfer 116; attitudetoward ownership 116

Joint venture 61, 116-7

K

Keiretsu 121,210-2Kemp criterion, the 139, 141, 144Kia 217Kim Dae-Jung 179Kim Young Sam 177-9Knowledge capital: public good nature of

10; cross-economy spill-over of 10;government's role for enhancing153

383

Korea (South Korea; Republic of Korea)4,6,18,20,44,46,51 , 191-218;changing comparative advantage 27;export promotion 28, 30; wigs andcomputer peripherals 30; HeavyChemical Industry Drive 31;automobiles 31; economic miracle39; in Crisis 1997 168, 180; regimechange 177; the political economyof policy-making 178-9; Japaneseannexation 193-4; the han psyche193; import-substitution under Rhee194; expanded education 195-6;delayed social programs 340;shifting from the U. S. market toThe Third World market 352; Seealso 'Chaebuls', 'Korea under Park','Heavy Chemical Industry (HC!)Drive, the: in Korea ', 'Japan-Koreacomparison ', 'Korea-Philippinescomparison' , 'Korea-Taiwancomparison ', Korea-the other NIEscomparison', 'Korea - U. S.comparison' , 'Labor relations inKorea', 'Original EquipmentManufacturer trade'

Korea under Park: coup vs. the SecondRepublic 178, 194; the exportpromotion phase 194; reformunleashes industrialization (See theSamsung business group) 194-7; theHeavy Chemical Industry Drive(HCI) phase (See 'HCI Drive Korea, the'); twin pillars ofindustrial policy 198-200; micromanagement of industry 198 (See'the HCI Drive'); the foreignborrowing boom-bust cycle 200,203-4

Korean Central Intelligence Agency(KCIA) 344

Korean War: impact on Japan 18; onHong Kong 18, 19; recovery fromwar by Korea 39

Kuo Ming Tang (KMT)/ The ChineseNationalist Party 177-8, 310

Kuo, Shirley W. Y. - Stabilization afterFirst Oil Crisis 244

Kuok, Robert 308Kuwait 46

384

L

Lab or utilization is intensified by trade :Taiwanese agriculture 25 ;Taiwanese textiles 25

Labor input per capi ta See 'Laborutilization is inten sified by trade '

Labor relations in Hong Kong : workersuninterested in union movement 256

Lab or relations in Korea: evolution 1945; government repre ssion 199; laborstrife and assassination of Park 200,2 17; union militancy afterdemocratization 207 ; unionmoderation in rece ssion 213 ; Seealso 'The Y. H. Strike '

Labor relations in Singapore: much workstoppage before independence 275 ;legislated tripartite wage negotiationprevented strikes 276

'Labor subordination' - banning ofstrikes, or lack of protect ion forstriker from retaliation 344

Latin America: debt cr isis 154; importsubstitution 154; See also 'Eas t Asia- Latin America comparison '

Laissez Fa ire 26, 147, 164; Justification137-9, vis-a-vis intervention 153-4 ,165; See also 'Monopoly, the caseaga ins t' , ' State intervention , the caseaga ins t')

Laissez faire of British Hong Kong :prob able cau se 250 ; justification255; effect See ' Hong Kong , deindustrialization '

Lee Kuan Yew: attracting inve stors fromadvanced countries 278, 290; twoprong strategy for development 2803

u, K. T. 294Liberalism 153-4Learning: costly 24 ; pace of 59 ; potential

of learning 59 ; shut -out from 93,100-1 ; microeconomic found ationof, 122-30

Learn ing -by-doing 30, properties of 92 ;139-49 ; imperfec t informationcauses rent-seeking 148; theprevention of rent -seeking mayencourage bureaucracy 149; Seealso ' the trade-development nexus ;


(the Stokey and Young view)' ,'Clemhout and Wan results, the '

Leaming-b y-exporting: the Hyundai case31; the Colombian garment case 8688, the Giant case 118-22 ; longbenefit lag of 159; in Korea 197

License/cross license 116-7 See 'Japan-Taiwan comparison '

Literacy 7Liu , T. C. 245Local content requ irement 95, 102; See

also 'Singer Corporation 'Lome convention 320Lotus Engineering 179

M

Macao 18, 19MacArthur 72Mahathir, Prime Minster of Malaysia 179Mah athir, Mirzan 306Malaysia 62, 298-9; affirma tive action,

62 ; in Crisis 1997; con spi cuousspending 177: recovered by selfhelp 185; ethn ic and religiouscomposition 305; the rural/urbandivide 305 ; government goa limproving life for the majority, thengrowth for all 305; See also'Malaysia-Mauritius compa rison ' ,'Indone sia -M alaysia comparison ' ,'Malaysia-Singapore comparis on' ,'Malaysia-Taiwan comparis on'

Malta 34Mainland China See 'PRe'Mansfield formula 40 , 46Manufactured output and export,

advantages of 5-6Marcos 215-6Market failure 7Market, the: information efficiency 138;

decision decentralized by price 138 ;efficiency through competitivepres sure 138; market discipline 138 ;nurturing innovation 138 ; tendencytoward its own destruction 139;decentrali zed exch ange 183

Market for durable goods 183;dependence on expe cta tions 183

Market for lendinglborrow ing See'Capital market'

Indices

Marubeni 212Masan 80Masan Export Zone 244Matsushita 119, 121Mauritius 8, 244, 298-9, 318·22 ; ethnic

mix 318; manufactured export askey to relatively high income 31820; role of local Chinese 320-1;international quota/tar iff featuresattracted Hong Kong investors 320;export zone 321-2, 327; lackingproductivity gain 321; as examplefor the 'Tolstoyan' requirements ofdevelopment 338-9; See also'Malaysia-Mauritius comparison' ,'Mauritius-NIEs comparison' ,'Mauritius-Taiwan comparison '

Mencius: Confucian political theory 65;prediction on Chinese unification337

Merida 121Meritocracy 62Ministry of International Trade and

Industry (MITI) , Japan 72,151,205,217

Mitsubishi 199, 203Mitsui 203Monopolies, the British Statute of 68Monopoly, the case against 138-9;

deadweight loss 138; Arrow's Law138

Multi-fiber Agreement (MFA) 320, 322,327; gradual change of quota 332

Multinational Corporations (MNC) 274;role in Singapore for investmentdecision 278, 290; for job creation278; for technical training 283; frofast catching up 283; for technology290; possible drawbacks : crowdingout of indigenous firms 288-9;' rootless' 278; making the economyvulnerable to risks 292-3 ;investment in hard disk drives(HDD) 347-8

Multiplicity of equilibrium terms of trade170-6; See also 'Fundamentals forthe system'

Myanmar 75, 299

385

N

Netherlands, the, 56-7, 228, 279 ; thrivingwhen being caught up 349

New Economic Policy (NEP) 306-7Newly Industrialized Economies (NIEs)

6, 20, 32, 39; as major suppliers ofelectronics to the U. S. 44; similarityto Japan 55; more replicable thanJapan 69; influences of Japan 71-4;other shared influences - socialhomogene ity/Confucianism 74, 79,273; rapidly rising R&D potential91-2; roles in Asia-Pacific supplychain/product cycle 111-2, 115-6,135; current technology 121; tomany but not all, serve as modeleconomies against the importsubstitution regime 154-63; form thecore to the comparative studies 190;overtaking the Philippines whichkept to import substitution 214; topfirms with quality patents 228;openness measure 276; position inthe product cycle 292; what MNCsoffer 293; implication for theKuznets view 298; evidence fromeconomies with differentcharacteristics 298-9 ; incomedistributions bracketed by U. S. andJapan 342; sharp drop of povertyafter industrialization 345; absenceof significant absolute poverty 345;catching up with advancedeconomies in HOI 345; See also,ASEAN-3 - NIE comparison ' ,'France - NIEs comparison ' ,Mauritius-NIEs comparison'

Nissan 210North Korea 18, 30, 75, 299North-South cooperation 110, 135;

sharing of gain 117-8North-South trade 22; loss / gain from

evolution in trade 333-335; See also'British machine-made fabriceliminated its Indian rival' , 'ChinaCircle's role in U. S. -Japancompetition in electronics'

Norway 133Norway-UK comparison 133

386

o

OECD 217, 335-6OEM 80Origina l Equipment Manufacturer

(OEM) trade 352; as an interactivetutorial process providingtechnology 352; product cycle woes,PRC displaced Korea in the U. S.market 352

OPEC 5Option theory 350Outward -oriented development

(Outward-orientation) 6, 20-1, 2631; compatibil ity with parliamentarydemocracy 3244; compatibility withactive unionism 344; See also'Outward orientation vs. importsubstitution'

Outward orientation vs. importsubstitution 97

Overtaking : the leader 5, 14; another latecomer 14

Overseas Chinese (Chinese Diaspora):capital competed for 258; with acommercial rather thanmanufacturing tradition 283;Singapore as a main node for thenetwork of, 295; viewed byJapanese managers as morecompatible than the Malay workers30 I ; kinship between MalaysianChinese and East Asian investors305; capital movable among variouscountries 308; facilitated the HongKong investment in Mauritius 318,20; symbiosis with the Chineseeconomy 325; talent attracted toTaiw an

p

Pao, Y. K. 254-5Paramesvara 274Park Chung Hee 30-1; compared to Rhee:

reform in Korea 18, 316; emphasison high growth 178; coup 194, 198;assass ination 194, 200, 207, 217;See also ' Korea under Park'

Parliamentary democracy 344


Patent 119Path dependence of development 88Planned economy 22, 45Penn World Table : data may extend to

the 1950s 50; includes data fromTaiwan

Penang, state of Malaysia 307; successfulbackward linkage 322; competitionfrom PRC 331

Peoples ' Action Party (PAP) 276People 's Republic of China (PRe) 18,

19,21, 47, 62, 298-9; de-l inked 9;reform 9; reform attracts investorsfrom ASEAN 309-10; accession toWTO poses trade competitionagainst Malaysia 310; paces forindustriali zation/globalization(relative to Argentina and Malay sia)311-2; balanc ing technologyacquisiti on against spiritualpollution 313; WTO membership asa means for market disciplin e 313;technology for cultural survival 3I3;'undervalued ' GDP in the worldmarket 315-6; deficit financing forjob-creation 318;achievementslIimitations 318; Seealso 'India-PRC comparison ' , 'PRCKorea comparison' , 'PRC-Taiwancomparison ' , 'PRC-RussialEas tEurop e comparison', ' size matters(to China), how' , 'Electronicproducts, product cycle woes ' ,'Footwear, product cycle woes'

Perlis Plantations 308Petronas Towers 179Philippines, the 216-8Philips 240Portugal 34Pohang Iron and Steel Mill (POSCO ) 204Policy reform 13Post-industrial society : U. S. and New

Zealand 8Poverty and outw ard-oriented growth

344; eradication in the NIEs 345Prebisch Hypothesis, the 82, 83Product cycle 109-11 I, 135,327;

fragmented product cycle 90; Seealso'Japanese investment inTaiwan' , 'Electronic products,product cycle woes ' , 'Footwear,

Indices

product cycle woes' , 'H ard DiskDrive, produ ct cycle woes'

Product reput ation: acquisition byassociation 118; by distinct productdesign 119

Protect ive barrier. Protective tariff 16, 27Public firm : difference between Korea

and Taiwan 219 ; disciplined bymarket force in Ta iwan 230-2; Seealso 'Industry-launching in Ta iwan '

Punctuality of delivery 88

Q

Quality control 88

R

Raffle s, Stamford 274Reform unleashes growth : India 9; Brazil

under Cardoso 9; Korea under Park18; Ta iwan under Chiang 18; thePRC under Deng, 19; Vietnam 19;Chile 75

Relat ive per capita real income (repcri)II ; phase diagram for 11; fourregularities about II

Repli cability : of East Asian cases 21. 49;cultural and other unique factors 49;of Korean case 195.213; ofTaiwanese case 244-5

Reverse brain drain 90Revi sionist School 154-5Rhee, Syngman 194, 196-7,316Roh , democratization under 194-5Role of the State, the 137, 154, 164Rule of LawlRule of Man 317Rollei: trained Singaporean workers 96,

283; bankruptcy 96, 283

s

Sachs 119Sam sung 80; from lobbist to entrepreneur

196-7 , 316 ; relationship with LG202; overtaking To shiba in DRAM

387

supply 21 1; as leading patent holder228

Satisficing 331, 350Saving 6; saving/income ratio 16Satellite industries 95, 130-1Second best. theory of 154Self-sufficiency 9,93; Juiche of North

Korea 103September 11. 2001 329Shimano 74, relatio nship with Schwinn

See ' the Giant-Schwinn saga'Shinjin 198Shu , Y. C. 258Singapore 6, 18, 20, 44, 46 , 273-96;

location on the Malacca Strait 38;meritocracy 62 ; more homogeneousthan the U. S. 20; than Malaysia 62 ;concentration in output mix 133;geography led to colonization 274;history left a multi-ethnic society274 ; separation from Malaysia 274;labor strife before independence275 ; closure of the British basemade job creation the priorit y 276 ;attempted import substitution 276 ;legislation against strikes 276-7 ;industrialization by foreigninvestment with micro -man agedinduce ment 276-9; infra-structureinvestment 276, 282-3; attractingTexas Instrument from Taiw an 2778; U. S. electronics inves tmentabsorbed surplus labor 277-8 ;location-based industries : finance.petrochemicals 278-9; industryupgrading: performance in income279 ; in indu stry mix 286-7 ; in trademix 280 ; in division of labor withMalaysia 281-2 ; in technical ability282 ; mean s: by co- investment 278;by wage correction 283-6 ; by use ofCentra l Providence Fund 283 -4,286, 290; by multinational firms fortechnology 290-1 ;critici sm/challenges of thedevelopment program : foreign firmscrowding out local firms 278, 289;over-accumulation 287-8; overconcentrati on on electronics 292-3 ;lacking indigeno us high tech start upfirms 294 ; negati ve growth in 2001330; basic needs but not 'we lfarism'

388

339-40 ; a 'design population'evolves 348, 356; the changinginequality measures reveal thatevolution 348-9; See also'Singapore-Sri Lanka comparison' ,'Hard Drive Disk industry' ,'Singapore-Taiwan comparison',,Singapore-Thai land comparison','Singapore-United Statescomparison'

Singer Corporation 130-1Size matters (to China), how 323-6Small ar.d Medium Enterprises (SMEs):

high tech sector, Taiwan 74;nurtured by pure chip foundries 229;garment (and other labor intensive)sector, Taiwan: transformed bysubcontract orders 96, 230; garmentsector, Japan 151; relation withbusiness groups, Korea 203, 218;success stories in Japan 205;weakened by exclusion, Korea 205,211; Japan-Korea difference:symbiosis vs. domination 210;symbiosis with large firms, Japan212; symbiosis with public firms,Taiwan 230-1; Korea-Taiwandifference: intra-national integrationvs. international free association 232

Social compact 141Social plannerlEconomic

planning/Central planning 138, 1534

Somalia 64Sony 282Soviet Russia See Soviet Union, RussiaSoviet Union: forced saving 6; failure

due to creative destruction 9; growthhalted 27; trade links to Finland,North Korea 30; import substitution97

South Asia 93Spain 34Specialized expertise 133Sri Lanka 8; See also 'Singapore-Sri

Lanka comparison'Start-up firm 132 .State, the role of See 'Government, the

role ofState enterprise 132State intervention, the case against: 138,

154


State intervention, the case for 138, 153;See also 'Government, the role of '

Strateg ic alliance 116Structural upgrading / Structural

transformation See 'Industryupgrading'

Subcontract arrangement 73, 116-7; as arepeated game 117; as a means fortechnology acquisition 119-21; Seealso the Giani-Schwinn saga

Sub-Saharan economies 12Suharto 179Sukarno 275, 278Sun Vat-sen 242Supply chain, lengthening IIISustained rapid growth 4; factors for 5

7: socio-political stability 5; export6; specializing in manufacturing 6;foreign investment 7; governmentinvolvement 7; foreign saving 7;compatible with authoritarian rule,only with the acquiescence of theruled 344

Switzerland 64

T

Taiwan 6, 18,20, 44,46,90,219-48;perceived as threat to the Americanmachine tool industry 96; role inAsia-Pacific trade flow III ; role inChinese bicycle export III ; localcontent requirement 130-1; productcycle 135; strength in fabrication butnot design/marketing 135; earlyhyper-inflation 178; Taiwan'sindustrial policy 223-4; in a newlight 234-45 ; 'growth withinstability ' - the guiding principle 243,340; interethnic relationsh ip 245;failure to compete against HongKong led to reform 258; Taiwan 'soriginal Austonesian speakers 305;monitored asparagus export 323;automobile ownership 323; successin attracting overseas Chinese talent326; negative growth in 2001 330;delayed welfare programs 340; Seealso 'Export zones/industrial parks' ,'Female labor' , 'Gia nt-Schwinn

Indices

saga, the' , 'Germany-Taiwancomparison' , 'Hong Kong-Taiwancomparison' , ' Industry-launching inTaiwan', 'Japanese investment inTaiwan ','Japan-Taiwancomparison', 'Korea-Taiwancomparison' , 'Singapore-Taiwancomparison' 'Taiwan as anexample'

Taiwan as an example : exportupgrading/diversification 85;developed subsequent to atemporary import substitutionregime 85; sustained growth afterdevaluation 86; specialized inexported parts/components 90;exported with local engineer/ guestworkers 90; R&D manpower/spending comparable to developedeconomies 91; exporting productswith better quality 94; improvedIabor skill through trade 96;transformed production in exportsectors 96, 248; gainedscalelflex ibility in specializing instandardized parts 103; inter-ethnicadjustment without affirmativeaction 310

Taiwan Semiconductor Corporation(TSMC): as leading patent holder228; as the pioneer in pure chipfoundry 229; relationship withPhilips 240; founder Morris Changattracted by Taiwan 326

Tan Kah Kee 283Technology acquisition 6-8, 24; via

trade/foreign investment 27, 45,109-110; via reverse brain drain 90;channels for 109-36; accompanyingthe product cycle 109; bundled vs.unbundled technology 116; viapurchase of foreignequipment/support service ; viasubcontracting 116-7 See also'Emulation' , 'Germ any-Taiwancomparison' , 'Japan-Taiwancomparison' , 'Licensing/Crosslicensing '

Technology backlog 17, 18,97Technology diffusion 129-130; See also

'Technology, transferof/Technology spillover'

389

Technology gap 32, 59, 97, 133Technology immature/mature: 53, 96,

101-7Technology progress/ Advance in

technology: a double-edged sword5,8; leader ' s increased lead 20;impact on primary good producer83; Sec also 'Total FactorProductivity growth '

Technology, transfer of/Technologyspillover: mechanism of 13;difference in mechanism for 14;trade-induced 21, 109; forms ofcontact 22; decided by trade regime26; influencing catching up 27-9;controlled 74; due to reverse braindrain 90; due to foreign investment116; as a game 122-30; gain from122; type of knowledge transferred123,129-30; incentive for 130; Seealso 'Watanabe case, the'

Terms of trade: volatility 169;uncertainty of 169; multipleequilibrium in 170

Texa s Instruments 277-8Thailand 21, 90; in Crisis 1997:

borrowed dollar-denominated loansfor real estates 176-7, 184; futiledefense of the baht 180-1; regimechange 177; cooperation with theIMF; as industrialized as Malaysia,but less open; 303; incomeinequality between Greater Bangkokand elsewhere 303; See also'Singapore-Thailand compari son'

The Limited 8Toshiba 211Total Factor Productivity (TFP ) growth :

causally dependent on trade 157;unstable over time 157; unreliable apredictor of future per capita outputgrowth 158; measurementsystematicall y biased, especiallyagainst the NIEs 159-64

Toyota Motors 240Trade, differentiating the five effect s of

21,27Trade-development nexus, the (the

Stokey and Young view) 29,31 ,9397; trade induces division of laborfor Taiwan ' s garment industry 96;See also ' Import substitution ' ,

390

'Learning by exporting ', 'Tradehelps industry upgrading '

Trade friction 323Trade helps industry upgrading:

Taiwanese machine tools made bymaintenance workers from sugarrefineries 96; Singapore hard diskdrives produced by labor trained forcamera production 96

Trade regime 26-7Trade, world 53-4, IIITransparency 169,181 , 186Trek 120-1Trend acceleration II , 16,40Trend deceleration 11Tsiang, S. C. 240, 245Twin mega-events of the 20'" century, the

22

u

Uganda 3United Arab Emirates 21United Kingdom (D. K., England,

Britain): as technical leader 5; leadover Germany, D. S. 18; BritishEmpire 20; relative to Germany 58;source of technical manpower 61;site of Industrial Revolution 63;Statute of Monopolies (1624) 68;ruler of Hong Kong and Singapore73; de-industrialized North 133

United Microelectronics Corporation(DMC): 229; as leading patentholder 228

United States: largest market 4, asleading economy 5, overtook UnitedKingdom as leader 5, 46, 330;disproportionate role in R&D 8-9;'hard core ' poverty 21; lead inmicro-electronics 44; low ruralincome 44; the American century


53; future of the leadership 330;principal market for electronicsproducts 330-1; See also 'Japan-U.S. comparison ' , 'Singapore-U. S.comparison'

v

Vanguard : as leading patent holder 228Vietnam 18,68-71 ; Emperor Gialong

used French support 69; reform 19,73

Voluntary Export Restriction (VER) 96,332

w

Wage, efficiency, and labor cost 86-88Washington Consensus 155Watanabe case, the 96World Bank: as part of the Washington

Consensus 155; not accessible toTaiwan 185; dealings withSingapore 278; StructuralAdjustment Program 321

y

Y. H. Strike , the (cause for Park'sassassination) 200

Yin, K. Y. 243, 258Yushing Constitution (of Korea) 210

z

Zaibatsu 72

Subject Index-Structured Comparisons

Andean group - North Americacomparison, exacting standards helplearning 88

Argentina-Australia comparison 358

Argentina-Germany comparison 359Argentina-Japan comparison 15-16,50-4:

cultural and resource base 5 I ;saving 51; growth of repcri 52, 359;

Indices

openness 52; shares in world export53; general protectionism vs. a' narrow moving band' 53; pace ofrise in the manufactured exportshare 84

Argentina-Singapore comparison 359Argent ina compared to Korea and Cyprus

84ASEAN-3 - NIE comparison 299: shared

pattern of globalization andindustrialization; richresourcelDutch disease for ASEAN3 300-1; Closer cultural tie to Japanfor the NIEs 300-1; NIEs overtookASIAN -3 302-3

Bangladesh-Mauritius comparison, inindustrialization/globalization

Chile-Taiwan comparison' 356China - Europe comparison (Ancient

times) 67East Asia - West Europe comparison:

similarity in pattern 34, 49, 56-7;difference in pace (artificialignorance) 19,57-9; eagerness forgrowth 59

East Asia - Latin America comparison:catching up with vs. faIling behindfrom America 12; in growth profile5 I; in world export share 54; intextile industry 87-88; benefitedfrom expanding trade 93; utilizingthe technology backlog 98

Europe-Japan comparison : guest workeror offshore production 136

France - NIEs comparison 191-2Germany-Taiwan comparison, in

technology acquisition 18Hong Kong-Macao comparison : under

colonial laissez fare, Hong Konghad the merchant houses assistingindustrialization 249-53 ; Post-1978roles-Hong Kong, the growthpole/Macao, another sateIlite 260

Hong Kong-Singapore comparison:adoption of industrial policy 250;regional financial center 258-9;avoidance of de-industrialization258-60 ; dynamism of local, privatefirms 273

Hong Kong -Taiwan comparison 243;pace of de-industrialization 245;whether SMEs go into high tech

391

250, 270; whether protectionismnurtures textiles 256-8; relativeattraction for overseas Chinesecapital 258; efficiency 270

India-PRC comparison ' , literacy andcollege education 345

Indonesia-Malaysia comparison - socialharmony in Crisis 1997 309

Japan-Korea comparison : similarities 21,32,68; differences 72, 209-12

Japan-Taiwan comparison: in technologylicensing 117; wage 118; productquality 121

Japan-U. S. comparison, attractingmigrant technical manpower 61

Korea-Philippines comparison 214-6Korea-Taiwan comparison: shared

properties with Japan 219-20 ;similar aspects in history and policy220; various performance measure s220-30 ; accessibility to IMF/worldbank 225, 242; differences in firmstructure 230-3; in export-mix 2314; General Trade Companies(GTCs) vs. 'Large TradeCompanies ' (LTCs) 232; style ofpolicy-making 240; position of largeprivate firms 232; financing of firms241; HCI drive 243; goal ofindustrial policy 240, 243

Korea-the other NIEs comparison 80,191-3,212-3

Korea - V. S. comparison : growth ratesduring industrialization 18;contemporary technology level 20;contemporary growth rates andAmerican policy debates 23, 59

Malaysia-Singapore comparison 62;shared multi-ethnic environment299; affirmative action/meritocracy299, 309; a population given byhistory or colonial design 303; themajority ranks the lowest or highestin education and income 303-5;relative positions of Malays 309;relative importance for equity andgrowth 347

Malaysia-Taiwan comparisonalternative channels to achieve intercommunal equity 310

Malaysia-Mauritius comparison , indiversificationllinkage 322

392

Mauritius-Taiwan comparison' , inagglomerative economy 321

Maurit ius-NIEs comparison, ininvestment and election 322

Mexico , in comparison with Singapore346

PRC-Korea comparison, in limits for percapita export 323

PRC-Taiwan comparison: benefitingfrom reverse brain drain 131;international marketing 317;attraction to expatriate talent 324;See also 'Giani-Schwinn saga, the'


PRC-RussialEast Europe comparison:superiority of gradualism in reform318

Singapore-Sri Lanka comparison 92Singapore-Soviet Union comparison 155

6Singapore-Taiwan comparison: avoiding

the cost of brain drain vs. seekingbenefits from reverse brain drain294

Singapore-Thailand comparison 187Singapore-United States comparison:

absence/presence of hard corepoverty 20-1

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