Chapter 16
Export-Oriented Growth
in East Asia
◼ Outline
Introduction: The High-Performance Asian Economies
Population, Income, and Economic Growth
A Note on Hong Kong
General Characteristics of Growth in the HPAE
Shared Growth
Rapid Accumulation of Physical and Human Capital
Rapid Growth of Manufactured Exports
Stable Macroeconomic Environments
The Institutional Environment
Case Study: Doing Business in the High Performance Asian Economies
Fiscal Discipline and Business-Government Relations
The Role of Industrial Policies
Targeting Specific Industries in the HPAE
Did Industrial Policies Work?
Case Study: HCI in Korea
The Role of Manufactured Exports
The Connections between Growth and Exports
Is Export Promotion a Good Model for Other Regions?
Case Study: Asian Trade Blocs
Is There an Asian Model of Economic Growth?
90 Gerber • International Economics, Sixth Edition
◼ What Students Should Know after Reading Chapter 16
The high-performing economies of Asia covered in Chapter 16 stand in sharp contrast to the Latin
American economies studied in Chapter 15. Generally speaking, the HPAE have avoided populist policies,
have shared the benefits of growth, and had relatively open economies. The primary goal of this chapter is
to flesh out this contrast in greater detail, and in the process, provide background information about the
institutional and policy environments of the high-growth Asian economies.
◼ Answers to End-of–Chapter Questions
1. Contrast the characteristics of economic growth in the HPAE with the characteristics in Latin
America.
Answer: Latin American economic growth was characterized as (1) inward oriented, (2) unequal,
2. How can passage through a demographic transition lead to higher savings and investment rates?
3. What are the characteristics of East Asian institutional environments that contributed to rapid
economic growth?
Answer: Several characteristics were instrumental. Among the more important ones are (1) well
4. Economists are divided over the effectiveness of East Asian industrial policies. Provide a balanced
assessment of the issues that are relevant to understanding the role of industrial policies in fostering
growth. Do you think one particular point of view is better than another? Why?
Answer: Industrial policies did not work. The targeted sectors did not grow any faster than the rest
5. How might manufactured exports contribute to economic growth?
Answer: There are several likely connections between manufactured exports and growth.
6. Is there a uniquely Asian model of economic growth? What are the issues, and how might we go
about answering that question?
Answer: Probably not. The best procedure to date for looking at this issue involves an examination
of total factor productivity. In the Asian case, the lion’s share of economic growth can be