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Abstract
Economic Development of Emerging East Asia presents economic studies of Taiwan and South Korea, compares them chiefly with Japan and the United States and finds that these East Asian countries are still in the process of emerging in the world economy. A timely quantitative and econometric analysis of the regional economies of emerging East Asia, the volume examines development indicators, effects of the 1997 Asian financial crisis, productivity growth, catching up and convergence of long run real GDP per capita growth, the time required for a country to catch up, colonialism and economic development in Taiwan and India. Arranged in increasing complexity of economic analyses, the chapters in this book provide a comprehensive understanding of emerging East Asian economies. In addition to serving as a handy reference for regional economists, policy analysts and researchers, Economic Development of Emerging East Asia can also be used as a textbook on economics and business.
“In Economic Development of Emerging East Asia: Catching Up of Taiwan and South Korea, Frank S. T. Hsiao and Mei-Chu Wang Hsiao offer a menu of their selective empirical work on the growth experiences of these notable economies, covering an impressive array of variables, from capital flows and exchange rates to productivity and economic growth. The book features innovative, practical econometric techniques that have been influential in the literature. It is an excellent compilation and an essential resource for any economist focusing on Asian economic development.”
—Michael G. Plummer, Director, SAIS Europe, and Eni Professor of International Economics, The Johns Hopkins University, USA
“Professors Frank and Mei-Chu Hsiao provide us with a comprehensive and concise volume on the comparative developments in Korea and Taiwan as the role models of successful development. It is a rich collection from their rigorous research in emerging East Asian economies in the past quarter century […] This book not only significantly contributes to development economics literature and Asian study, but also offers some important lessons for many practitioners in developing countries to further develop their economies.”
—Peter C. Y. Chow, Professor of Economics and Asian Studies, City University of New York, USA
Frank S. T. Hsiao, professor emeritus of economics, Department of Economics, University of Colorado at Boulder, USA, is associate editor of the Journal of Asian Economics. He has published extensively on growth models, production functions, Asian economic development and computer-assisted teaching in leading professional journals, and is the author of Economic and Business Analysis: Quantitative Methods Using Spreadsheets (2011).
Mei-Chu Wang Hsiao, professor emerita of economics, Department of Economics, University of Colorado at Denver, USA, has published many articles on econometric analysis of Asian economies. She is the coauthor (along with Frank S. T. Hsiao) of Economic Development of Taiwan: Early Experiences and the Pacific Trade Triangle (2015).
In recent years, the fast growing economies of the Asia-Pacific region have attracted the attention of economists, politicians, researchers and business communities. The economic dynamics of the ever-growing Asia-Pacific region made the United States to adopt a "rebalancing strategy" toward Asia and to propose the Trans-Pacific Partnership (TPP) and Free Trade Area of Asian-Pacific (FTAA). With uncertainty about Brexit and the current Trump Administration, TPP and FTAA appear to be "dead." Nevertheless, the outlook for the Asia-Pacific region is still favorable with the expectation of continuous growth (IMF, 2014). The long run data from IMF (2016) also indicate the possibility of an Asia-centered world economy.
This book is a collection of the papers published during the two decades at the turn of the century, the period economists generally consider the emergence of the Asia-Pacific century. The major players have been the Newly Industrializing Economies (NIEs): Taiwan, South Korea, Singapore and Hong Kong. However, Singapore and Hong Kong are regarded as city states, thus, development economists usually see Taiwan and South Korea as the countries that truly achieved a "miracle growth." Using historical, quantitative and econometric analyses, this book studies the present and past economies of emerging East Asia, providing future policy implications for economic development.
Chapter topics include development indicators, effects of 1997 Asian financial crisis, productivity growth, catching up and convergence of long-run real GDP per capita growth, the time required for a country to catch up, and a special chapter on colonialism and economic development (in Taiwan and India). A timely collection, the various topics in this book provide a comprehensive understanding of emerging East Asian economies, in addition to economic analyses explaining, among other subjects, the basic concept of total factor productivity and purchasing power parity (international dollars).
Table of Contents
Section Title | Page | Action | Price |
---|---|---|---|
Cover | Cover 1 | ||
Front Matter | iii | ||
Title page | iii | ||
Copyright information | iv | ||
Dedication | v | ||
Brief contents | vii | ||
Contents | ix | ||
List of figures | xiii | ||
List of tables | xvii | ||
Sources of the chapters | xix | ||
Acknowledgments | xxi | ||
About the authors | xxiii | ||
Introduction | 1 | ||
Part I Studies of emerging east asian economies: Taiwan and korea | 9 | ||
Chapters (1-5) | 11 | ||
Chapter 1 Some development indicators of taiwan | 11 | ||
1.1 Introduction | 11 | ||
1.2 Some Economic Indexes | 12 | ||
1.3 Social Indexes | 15 | ||
1.4 Political and Defense Development Indexes | 18 | ||
1.5 Concluding Remarks | 20 | ||
Acknowledgments | 20 | ||
References | 20 | ||
Chapter 2 Capital flows and exchange rates during the asian financial crisis | 23 | ||
2.1 Introduction | 23 | ||
2.2 Four Explanations of the Crisis | 26 | ||
2.3 Comparison of Taiwanese and Korean Economies | 27 | ||
in the 1990s | 27 | ||
2.3.1 The real sector | 28 | ||
2.3.2 The external and financial sectors | 31 | ||
2.4 Short-term Debt, Exchange Rates and Crisis in Korea | 38 | ||
2.5 On the Currency and Banking Crises | 42 | ||
2.6 The Causality Test—The Case of Korea | 44 | ||
2.6.1 The unit root test | 44 | ||
2.6.2 The cointegration test | 45 | ||
2.6.3 The ECM causality test | 46 | ||
2.7 The Causality Test—The Case of Taiwan | 48 | ||
2.7.1 The unit root test | 49 | ||
2.7.2 The cointegration test | 49 | ||
2.7.3 The standard Granger causality test | 50 | ||
2.8 Conclusion: Lessons and Challenges | 51 | ||
Sources of Data | 54 | ||
Acknowledgments | 54 | ||
References | 55 | ||
Chapter 3 Productivity growth | 59 | ||
3.1 Introduction | 59 | ||
3.2 The Malmquist Productivity Index | 63 | ||
3.3 Sources of Data | 68 | ||
3.4 Labor and Capital Productivities | 69 | ||
3.5 Total Productivity Growth 1979–96 | 71 | ||
3.5.1 Analysis of the cross-section data | 71 | ||
Comparisons at the aggregate level | 71 | ||
Correlation coefficients | 75 | ||
Intercountry coefficients | 77 | ||
Intracountry coefficients | 77 | ||
Correlation at the sectoral levels | 79 | ||
3.5.2 Analysis of time-series data | 80 | ||
3.6 Productivity Growth of Three Categories | 81 | ||
3.7 The Innovators of the Manufacturing Industry | 83 | ||
3.8 Some Concluding Remarks | 86 | ||
Appendix 3A Overall Industrial Structure of Korea and Taiwan | 87 | ||
Acknowledgments | 89 | ||
References | 89 | ||
Chapter 4 Korean and taiwanese | 93 | ||
4.1 Introduction | 94 | ||
4.2 The Malmquist Productivity Index | 96 | ||
4.3 The Data and Estimation of Productivity Growth Rates | 99 | ||
4.4 The Structure of the Manufacturing Industry | 101 | ||
4.5 Aggregate Productivity Performances | 105 | ||
4.6 The Trend of Each Index among the Three Categories | 107 | ||
4.7 The Trend of Five Indexes in Each Category | 111 | ||
4.8 The Innovators | 112 | ||
4.9 Conclusions | 115 | ||
Appendix 4A: Sources of Data | 116 | ||
Acknowledgments | 116 | ||
References | 117 | ||
Chapter 5 Colonialism, learning and convergence: A comparison of india and taiwan | 119 | ||
5.1 Introduction | 120 | ||
5.2 India and Taiwan in the World Economy | 121 | ||
5.3 The Colonial Heritage | 124 | ||
5.4 A Simple Model of Learning | 134 | ||
5.5 Unit Root-Based Tests of Convergence | 139 | ||
5.6 A Logistic Model of Convergence | 141 | ||
5.7 Concluding Remarks | 145 | ||
Appendix 5A: Explanations of Table 5.1 | 147 | ||
Appendix 5B: Illustration of Table 5.1 | 148 | ||
Acknowledgments | 149 | ||
References | 150 | ||
Part II Catching up and convergence in east asian economic growth | 155 | ||
Chapters (6-9) | 157 | ||
Chapter 6 Miracle or myth of asian nics’ growth: The irony of numbers | 157 | ||
6.1 Introduction | 157 | ||
6.2 The Nature of the “Miracle” | 158 | ||
6.3 On Total Factor Productivity | 161 | ||
6.4 On Percentage Contribution of TFP | 163 | ||
6.5 Other Estimates of TFP Growth Rates and Contribution | 168 | ||
6.6 Concluding Remarks | 172 | ||
Acknowledgments | 173 | ||
References | 174 | ||
Chapter 7 “Miracle growth” in the twentieth century: International comparisons of | 177 | ||
7.1 Introduction | 177 | ||
7.2 International Comparisons of Real GDP per Capita | 180 | ||
7.2.1 Comparisons of real GDP per capita level | 181 | ||
7.2.2 Real GDP per capita growth rates | 186 | ||
7.2.3 Coefficients of variation | 191 | ||
7.2.4 Comparisons of the prewar and postwar growth of countries | 192 | ||
7.3 Long-Run Comparisons of Taiwanese and Korean Development | 193 | ||
7.3.1 Slow postwar recovery | 194 | ||
7.3.2 The take-off point | 195 | ||
7.3.3 The Korea–Taiwan reversal | 195 | ||
7.3.4 On the war damage | 197 | ||
7.3.5 Japanese legacy | 198 | ||
7.4 Falling behind the Japanese Growth | 202 | ||
7.4.1 Real GDP per capita ratios | 203 | ||
7.4.2 The transition period | 204 | ||
7.4.3 A common turning point | 205 | ||
7.5. International and Domestic Environments | 206 | ||
7.5.1 Performance of Asian NIEs vis-à-vis Japan | 206 | ||
7.5.2 The world development | 207 | ||
7.5.3 Why did Korea and Taiwan fall behind Japan? | 209 | ||
7.6 Regime Change and Structural Change | 210 | ||
7.6.1 The Perron test | 211 | ||
7.6.2 The real GDP per capita series | 212 | ||
7.6.3 The real GDP per capita growth rate series | 214 | ||
7.7 Concluding Remarks | 216 | ||
Sources of Data | 218 | ||
Acknowledgments | 218 | ||
References | 219 | ||
Chapter 8 Catching up and convergence: On the long-run growth in east asia | 225 | ||
8.1 Introduction | 225 | ||
8.2 Games of Catching Up | 227 | ||
8.3 A Simple Model of Learning | 229 | ||
8.4 A Logistic Model of Convergence | 232 | ||
8.5 Time Required for Convergence | 237 | ||
8.6 Concluding Remarks | 240 | ||
Appendix 8A: On the Coefficient of Learning (r) | 241 | ||
Appendix 8B: Ratio of the GDP Per Capita | 242 | ||
Appendix 8C: Calculation of the Time Required for Convergence | 243 | ||
Sources of Data | 244 | ||
Acknowledgments | 244 | ||
References | 244 | ||
Chapter 9 Epilogue: From emerging east asia | 247 | ||
9.1 Introduction | 247 | ||
9.2 Cross-Section Comparison of GDP per Capita | 249 | ||
9.3 Time-Series Comparison of GDP per Capita in PPP | 252 | ||
9.3.1 Comparison among Asian NIEs, Japan, the United States, China and India | 252 | ||
9.3.2 Comparison among Asian NIEs, Japan, the United States and the Four EU Countries | 255 | ||
9.3.3 Comparison among Asian NIEs, Japan, the United States and the ASEAN-4 Countries | 258 | ||
9.4 Catching Up and Convergence in Emerging East Asia | 259 | ||
9.5 Conclusion—The Prospect of an Asia-Centered World Economy | 261 | ||
9.6 Postscript—Q&A | 265 | ||
Appendix 9A: Derivation of the Purchasing Power Parity (PPP) Exchange Rate | 270 | ||
Appendix 9B: On the Derivation of the Big Mac Index | 271 | ||
GDPpc in Big Mac PPP | 272 | ||
Appendix 9C: Taiwan as the “Republic of Technology” (ROT) | 272 | ||
Appendix 9D: Taiwan’s Innovative Activities and the World Competitiveness Index | 275 | ||
Sources of Data | 277 | ||
References | 278 | ||
End Matter | 281 | ||
Index | 281 |