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Getting Interventions Right : How South Korea and Taiwan grew rich

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  • Getting Interventions Right
  • Rodrik, Dani
  • National Bureau of Economic Research


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Title Getting Interventions Right
Similar Titles
Sub Title

How South Korea and Taiwan grew rich

Material Type Reports
Author(English)

Rodrik, Dani

Publisher

Cambridge:National Bureau of Economic Research

Date 1994-12
Series Title; No NBER Working Paper Series / 4964
Pages 78
Subject Country South Korea(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Economic Administration
Holding National Bureau of Economic Research

Abstract

Most explanations of Korea's and Taiwan's economic growth since the early 1960s place heavy emphasis on export orientation. However, it is difficult to see how export orientation could have played a significant causal role in these countries' growth. The measured increase in the relative profitability of exports during the 1960s is too insignificant to account for the phenomenal export boom that ensued. Moreover, exports were initially too small to have a significant effect on aggregate economic performance. A more plausible story focuses on the investment boom that took place in both countries. In the early 1960s both economies had an extremely well- educated labor force relative to their physical capital stock, rendering the latent return to capital quite high. By subsidizing and coordinating investment decisions, government policy managed to engineer a significant increase in the private return to capital. (The rest omitted)