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The East Asian miracle : Export-led or investment-led?

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<Abstract> Disagreements persist on whether the Korean and Taiwanese economic miracle is export-led as advocated by market fundamentalists or investment-led as envisioned by the market interventionists. The Granger causality test has been conducted within the context of a VAR system comprised of exports, investment, imports and GDP. The test results show that the fundamentalists’ version is more compatible with the data than the interventionists’.
Keywords: East Asian miracle; Economic growth; Granger causality; Industrial policy;
Export promotion
JEL classification: F43; C32;
*
Tel.: +82-2-3299-1013; fax: +82-2-968-5072. E-mail address: yhy@kdischool.ac.kr.
1. Introduction
One of the most controversial, and still debated issues in development economics is what exactly has made the East Asian miracle possible. Some analysts (Balassa, 1978; Krueger, 1997; Bhagwati, 1999; I will call them market fundamentalists hereafter) attribute the phenomenal performance to the implementation of the market friendly policy measures (“getting the basics right”), especially the unification of exchange rates accompanied with devaluations. This liberalization of markets, they suggest, induced a great spurt in exports in these economies and it further led to a sustained increase in investment and output. Others (Amsden, 1989; Wade, 1990; Rodrik, 1995; I will call them market interventionists), however, emphasize the active in


Full Text
Title The East Asian miracle
Similar Titles
Sub Title

Export-led or investment-led?

Material Type Reports
Author(English)

Yoo, Yoon Ha

Publisher

Seoul:KDI School of Public Policy and Management

Date 2008
Series Title; No KDI School Working Paper Series / 08-07
Pages 15
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < General
Holding KDI School of Public Policy and Management

Abstract

"Disagreements persist on whether the Korean and Taiwanese economic miracle is
export-led as advocated by market fundamentalists or investment-led as envisioned by the market interventionists. The Granger causality test has been conducted within the context of a VAR system comprised of exports, investment, imports and GDP. The test results show that the fundamentalists’ version is more compatible with the data than the interventionists’."