Boxill
Title: The End of the 'Asian Model'?
Edited by: Holger Henke and Ian Boxill
Reviewed by: Ian Boyne
THE ASIAN financial sector crisis, which erupted first in Thailand in mid-1997, has sent many a social scientist back to the drawing board to analyse what it all means in terms of the much vaunted 'Asian model'.
Some have said the crisis showed that the model was unsustainable, precarious and revealed systematic problems.
In short, the state interventionist policies had shown up their weaknesses, embarrassing the Keynesians. Others have said with equal fervour that the financial sector crisis shows the vulnerability of the Washington Consensus and the nefarious effects of globalisation, even for well-managed economies.
Still others point to the ineffectiveness of the IMF and the alleged bad advice which it gave to the Governments. The book under review: The End of the 'Asian Model'? is an excellent introduction to the debate on the issue and provides a wealth of information for discussion points.
An outstanding feature of the 218-page book, published under the theme "Advances in Organisation Studies", is the depth of the historical background which is provided, as well as its statistical richness. The chapter on "Industrialisation in East Asia" is highly useful and gives the kind of information which is critical if one wants to engage in serious discussion of the issues.
Govt's role
The book demonstrates the crucial role which Government policy and intervention played in the growth of the Asian newly industrialised countries (NICs). The neo-liberal fellows will have to reckon with the weight of the empirical evidence against them.
In the case of Singapore, for example, we are told that there was no ideological commitment to free enterprise.
"The Singapore development model carried the lesson that public enterprise, organised through a sort of political entrepreneurship, can be run efficiently and at a profit", writes W.G. Huff in his chapter on "Growth and Planning in an Asian NIC: The Singapore Development Model".
Between 1960 and 1996 Singapore's real GNP increased 19-fold and moved from the 33rd highest per capita income in 1965 to eighth by 1995. Between 1966 and 1996, real GDP grew by 6.4 per cent, largely due to Government expenditure on infrastructure and protected import-substituting industrialisation. There was strong Government control over the price mechanism, just like in Korea and Taiwan.
Direct incentives were given to private firms, and industries were targeted and given special treatment by the state. Besides, the land reforms undertaken in Korea and Taiwan contributed considerably toward the high levels of equity which exist in those countries, and the willingness of the people to support the state's developmental goals.
Importantly, too, ideology and national cohesion played a critical role in the development of the Asian NICs. Singapore is a classic example.
The competition with Malaysia after Singapore's separation in August 1965 provided the rallying point for Lee Kuan Yew to whip the people into a national frenzy -- for production and development.
"The syndrome of extreme vulnerability found a determined will among the Singaporean leaders to mobilise the island society, using methods that, in some respects, are reminiscent of campaigns and mass rallies in China", writes Phillippe Regnier in his chapter on Singapore and the 21st Century.
Lee Kuan Yew was an idealogue, pure and simple, and Singapore's achievements (now a member of the OECD) show what can be done when people's psychic energies are mobilised.
The End of the 'Asian Model'? does a first-class job in showing that economic development is multifaceted and complex and that context and culture are very important; hence one ought to be careful about the notion of "models".
There is a most enlightening chapter on South Korea and its outstanding achievements. Yet Korea experienced a major financial sector crisis, despite having followed the Washington Consensus dutifully.
Lesson? "The Korean crisis has demonstrated that even economies with a strategic (e.g. limited and controlled) integration into the world economy ... are also vulnerable to rapid shifts in the international capital market says Pablo Bustelo.
This is a book that Holger Henke and Ian Boxill should be proud to have their names attached to. It is an excellent piece of social science writing and editing which displays both the authors' and editors' wide reading in economic development.
