{"id":74987,"date":"2020-05-08T13:34:20","date_gmt":"2020-05-08T13:34:20","guid":{"rendered":"https:\/\/essays.homeworkacetutors.com\/effect-of-state-intervention-on-economic-growth-of-east-asian-nations\/"},"modified":"2020-05-08T13:34:20","modified_gmt":"2020-05-08T13:34:20","slug":"effect-of-state-intervention-on-economic-growth-of-east-asian-nations","status":"publish","type":"post","link":"https:\/\/www.colapapers.com\/us\/effect-of-state-intervention-on-economic-growth-of-east-asian-nations\/","title":{"rendered":"Effect of State Intervention on Economic Growth of East Asian Nations"},"content":{"rendered":"
\n

The East Asian Miracle: To what extent was state intervention responsible for the economic growth of the Asian Tigers?<\/h4>\n

Abstract<\/h3>\n

According to a 1993 World Bank report named \u2018The East Asian Miracle\u2019, the tremendous economic growth<\/a> experienced by the Asian Tigers (South Korea, Taiwan, Singapore, Hong Kong) was due to the neoliberal fiscal policies implemented by their respective governments. However, it has been suggested that the state played a significant role in the economic evolution of all four states, and that it was an interventionist development model that helped the countries progress from \u2018under-developed\u2019 to \u2018advance\u2019 in only thirty years. Therefore, to what extent was state intervention responsible for this economic boom? Why did a particular growth strategy achieve such unbelievable results? This dissertation aims to answer these questions by first defining the theoretical framework on which this topic sits, before analysing the economic and political history of each of the four countries. The essay then goes on to evaluate the explaining factors behind said growth. It concludes that it was not simply state intervention that led to rapid economic growth, but rather an intense government-led development model that was used to some extent by each state. This model\u2019s success was due to the culture, attitudes to education, and strength of the government shared in each of the Tigers.<\/p>\n

The
\nEast Asian Miracle: To what extent was state intervention responsible for the
\neconomic growth of the Asian Tigers?<\/strong><\/p>\n

Introduction<\/h2>\n

The term \u2018Asian Tigers\u2019 refers to a group of four East Asian states<\/a> that each underwent a phase of astonishing growth and development. From 1965 to 1995, the countries of South Korea, Taiwan, Singapore, and Hong Kong experienced growth rates of over 6% on average and astounded the international community by transforming from \u2018third world\u2019 economies into some of the most advanced in the region (Mascelluti, 2015). A 1993 World Bank report named \u2018The East Asian Miracle\u2019 attributed a market-led development model and neoliberal policies as the reasoning for their lengthy economic boom, due to the low taxes, small welfare states, and export-led policies that were observed in each of the states (1993). Indeed, since the end of WWII, the neoliberal approach to developing low-income economies has dominated academia, partially due to its success in achieving growth in the West. It is engrained within international politics and is supported by the IMF, the World Bank, and the US (Shirley, 2014). However, neoliberalism has been criticised as a mechanism for supressing under-developed states from growing (Yeung, 2000), and in the case of the four Asian Tigers, a distinct alternative road to development may be interpreted. Therefore, critics have argued that state intervention and the industrial strategies they implemented had a much more significant effect on economic development than neoliberal policies and have reasoned that it was not Smith\u2019s \u201cinvisible hand\u201d that stimulated growth, but rather the \u201cvisible hand\u201d of each of the Tigers\u2019 governments (Movahed, 2014). Therefore, this dissertation will attempt to gauge to what extent can state intervention explain the astonishing growth the Asian Tigers faced when compared to other development models by exploring which model is most applicable to each state, and why. Comparisons will be made between each of the Tigers, and overall an extensive analysis of the causes of the Asian Miracle will hopefully be achieved.<\/p>\n

The outline for the dissertation is
\nas follows; first, an explanation of the theoretical background of the topic.
\nThis consists of a breakdown of three distinct development models found in
\nliterature which are most likely to properly explain the economic growth in
\neach of the Asian Tigers. The second section will analyse the economic and
\npolitical history of South Korea, Taiwan, Singapore and Hong Kong in order to identify
\nwhich economic development model was responsible for each state. The third
\nsection evaluates why the relevant strategies where so successful in achieving
\nsuch high growth rates. Several factors are discussed including culture,
\neducation, and political climate. The fourth and final section concludes that
\nwhilst government intervention is somewhat responsible for the economic
\ndevelopment experienced, a government-led development model may be more closely
\nattributed to this achievement. <\/p>\n

Theoretical Background<\/h2>\n

In order to fully analyse the
\nextent to which state intervention is responsible for the economic development
\nof the Asian Tiger states, it is vital to define the theoretical foundation on
\nwhich the topic sits. The economic development of the four Tigers represents just
\none segment of a larger sphere of development economics, a topic which studies
\nthe transformation of underdeveloped nations into more affluent ones.
\nDevelopment economics is relatively new within academia, yet numerous models
\nthat detail a country\u2019s growth strategy have risen to prominence. These ideas
\ncan be said to generally fall under three separate umbrellas of political
\nthought and have come to be seen as the most established within the topic. The
\nthree most relevant theoretical models share the economic philosophies of Keynesian,
\nNeoliberal, and Heterodox theories. These are interventionist, market-led, and government-led
\nmodels for economic development respectively (Banuri, 2013). Due to the variety
\nand complexity of economic development, it is important to define each model in
\norder to determine the extent to which a state-intervention model was followed
\nas opposed to market-led or government-led models.<\/p>\n

The model which most closely
\nresembles the notion of state-intervention is interventionist, which largely
\ndraws upon the philosophies of Keynesianism and the idea that governments
\nshould make necessary interventions in order to correct errors in the free
\nmarket (Deprez, 1997). Although actors are considered rational, supervision by
\nthe state in required to stabilise output. As is the case in most monopolistic
\nand imperfect-competition markets, a firm may exercise abusive actions that
\nresult in a loss of welfare, therefore state intervention is needed in order to
\ndecrease unemployment and encourage growth (Sun, 1991). This is most often
\nachieved through policies such as taxation, price setting, and subsidies, and
\nis one of the key arguments in Keynesian economic theory (Lawlor, 2006). All
\neconomies to some extent undergo state intervention, however the amount each
\nexperiences varies drastically. Whilst Chandavarkar dismantled the argument
\nthat Keynesian theories apply to the development model, he concedes that
\nMaynard Keynes offered the first \u201ceconomic rationale for a central bank as a
\ndevelopment agency,\u201d (1986) which paved the way towards a working development
\nmodel where the market and government of a state synchronise in order to
\nfurther economic progress and therefore development. Therefore, the
\ninterventionist development model has gained significance within development
\neconomics academia and may go far in explaining why the Asian Tigers
\nexperienced such rapid growth. <\/p>\n

As mentioned previously, the 1993
\nWorld Bank report regarded neoliberal economic policies as the main drivers
\nbehind the Tiger states\u2019 development, rather than state-intervention.
\nNeoliberal ideology resides at the opposite end of the development economics
\nspectrum to the interventionist model, and consequently gives rise to the
\nmarket-led development model. The market-led model is based on the neoliberal
\nargument that state intervention prevents development, as when government
\ninterference grows too big it restricts the freedom of dynamic individuals who
\ndrive economic growth (Ellickson, 1989). Therefore, development failures in
\nsome economies, such as the USSR, can be blamed on overbearing state
\nintervention. In order to promote growth, the market-led development model
\nsupports policies such as deregulation, privatisation, lower taxes, and the
\nliberalisation of trade through the elimination of tariffs and other barriers (Bhattacharjea,
\n2008). Supporters of the market-led model suggest that states who implement
\nthese policies will experience freer markets and less corruption, resulting in
\nan increase in productive efficiency that will translate into higher economic
\ngrowth (Danby, 1998). It can, however, be argued that this model results in the
\nhigh-tech, value-added industries being dominated by more developed nations,
\nand that under-developed nations are trapped by low value-added industries such
\nas resource extraction, agriculture and light industry (Chandrasekhar, 1992). Nevertheless,
\nproponents of the market-led model have argued that this still remains a more
\nprosperous source of growth compared to the current position of developing states
\nand may therefore be responsible for the growth experienced within the Tiger
\nstates (Jomo and Von Arnim, 2008). <\/p>\n

The third and final economic
\ndevelopment model that may be responsible for the growth of the Asian Tigers is
\nthe state-led model. Whilst in the interventionist model the government only
\nintervenes in the otherwise-open economy when deemed necessary, the state-led
\nmodel is distinctly different in that the state plays a central role in
\nmanaging resources and guiding the markets. This model is defined in relation
\nto the school of Heterodox economics, and what makes the government-led growth
\nmodel unconventional is that it refutes one of the key foundations of classical
\neconomics, that what benefits a rational actor must therefore benefit the
\nstate\u2019s economy overall (Dow, 2007). Traditionally, rational individual actors
\nalways want to hone in on the optimally efficient activity presented to them in
\nthe present, whereas as the state-led model proposes that development is best
\nachieved when the focus is on improving future activities (Ellickson, 1989). As
\nrational individual actors would never participate in substandard industries of
\ntheir own free-will, a steady push by the government is therefore required in
\norder to invest in said activities so as to fully develop the economy in the
\nfuture. Chang and Grabel propose that the government-led growth model uses the
\nensuing policies in order to stimulate growth: a firm grip over both foreign
\nand capital debt; an adoption of a wary attitude towards privatisation and the
\nnationalisation of some industries where applicable; trade protectionism to
\nallow budding industries to develop; a laissez-faire attitude towards
\nintellectual property law; and a well-defined plan in order to systematically
\ndevelop higher value-added industries (2004). Therefore, the state-led
\ndevelopment model may be a viable alternative in claiming responsibility for
\nthe rapid growth observed in the four Tigers.<\/p>\n

When looking at these three models,
\nit is clear that they cover a significant proportion of the policies that a
\nstate may decide to implement in order to create growth. Therefore, it is rational
\nto assume that the governments of South Korea, Taiwan, Singapore, and Hong Kong
\nfollowed at least one of these models. In the following analysis, the economic
\ndevelopment histories of each state will be discussed in order to determine the
\ndevelopment path they took, and the development model each country most closely
\nfollowed will be deduced. <\/p>\n

Country Analysis<\/h2>\n

South
\nKorea<\/em><\/h3>\n

When looking to determine the
\nextent of state intervention within South Korea, a logical starting point is
\nwhen the country finally gained independence from colonial Japanese rule in
\n1945, where it immediately found itself placed under US military occupation (Kim,
\n2014). The attainment of autonomy that they had yearned for was quickly
\ndominated by the Korean War (1950-3) with the North, which obliterated
\ntwo-thirds of the country\u2019s manufacturing facilities worth over three times
\ntheir GNP (Shin, 2003). The first phase of the country\u2019s economic development
\nconsisted of recuperating from the destruction of the war, with US aid on
\naverage consisting of 15.9% of GNP (with a peak of 22.9% in 1957) (Shin, 2003).
\nImport substitution industrialisation was implemented with 30% of aid diverted
\ninto agricultural equipment, and the US owned 64% of investment savings (Shin,
\n2003). The economic growth South Korea achieved at this time was heavily
\nreliant on the contributions made by the US, both in investment savings and
\naid, and was therefore vulnerable to market fluctuations (Shin, 2003). It can
\ntherefore be observed that an interventionist model was already being used in
\norder to stimulate development.<\/p>\n

The coup implemented by Park and
\nhis supporters in 1961 set the marker for which the second economic development
\nperiod came to fruition: the expansion of export-oriented development and light
\nindustries. Due to its diminishing reliance upon the US government to aid in
\nbuying imports and its recovery from the war, the South Korean economy was now
\nstarting to make use of the cheap labour force at hand in order to strengthen
\nits exportation of light industrial goods. It is here that the initial
\ndeviation from the interventionist development model can be discerned,
\npropagated by the establishing of the First Five-Year Economic Development
\nPlan. Distinct macro-economic targets for growth were adopted for the trade
\nbalance and industrial structure, and the plan defined clear industrial, trade
\nand macro-economic policies in order to achieve these goals. It was named
\n\u201cguided capitalism\u201d, in which \u201cthe state shall either directly participate or
\nindirectly render guidance\u201d to crucial industries, predominantly those that
\nwould result in rapid export growth such as the labour-intensive light
\nmanufacturers (Shin, 2003). It is here, therefore, where the shift toward a
\ngovernment-led growth model and away from state intervention was made.<\/p>\n

The growth experienced by the country
\nin the early 1960s was unprecedented, reaching as high as 10% some years,
\nhowever this was not viewed as a sustainable foundation for further development
\nby the Park government. The country\u2019s development may have become stagnant if
\nit had remained within the same stage with no high-value-added industries being
\nestablished. Therefore, government-led development policies were implemented as
\nthey used subsidies and tariffs to shield budding advanced industries from the
\nglobal market, whilst also reinvesting the foreign currency earned through
\ntheir expanding exports into the machinery and training needed to evolve into
\nthe next developmental phase (Chang, 2007). It is this strong push from the
\nstate to shelter and nurture tertiary industries that indicates that state-led
\ndevelopment is responsible for South Korea\u2019s growth.<\/p>\n

This progression resulted in the
\nthird stage of economic development, as seen in Park\u2019s Second Five-Year Plan:
\nthe advancement of chemical and heavy manufacturing, buoyed by new policy instruments
\nand legislation (Shin, 2003). Export-driven development stemming from heavy
\nindustry sustained the country up until the early nineties, resulting in this
\ndevelopment era being the longest thus far. Although still being retained by substantial
\ngovernment restrictions, foreign capital was pursued to help reinforce any
\npotential growth and exports escalated at almost 39% per annum (Shin, 2003).
\nThroughout this phase government-led policies were remained prominent, and factor
\ninput increases, both in the accumulation of capital and in quality of labour
\nthrough education, resulted in a monumental amount of growth in manufacturing
\noutput and the ideal placement for South Korea within the international market
\nfor the next period of development (Collins, 1990). The South Korean economy
\nexperienced sizeable changes throughout the 1990s which shifted them into the
\nfourth and current stage of development: the drive towards high tech
\nindustries. High-technology exports only yielded 15% of total export in 1988,
\nhowever that figure has increased significantly year on year ever since (World
\nDatabank, 2018). <\/p>\n

When assessing the extent to which
\nstate intervention was responsible for the country\u2019s growth, it is clear that the
\nentirety of South Korea\u2019s development was propelled by a central government. Well-conveyed
\neconomic plans, state-owned industries and a determined reinvestment of
\nearnings in infrastructure over several decades allowed the country to evolve
\nthrough clear stages of development, even when said push into new industries
\nappeared less optimal to individual market actors (Shin, 2003). Therefore, it
\nwas a state-led, rather than simply interventionist or even market-led,
\ndevelopment model that was responsible for the country\u2019s economic growth.<\/p>\n

Taiwan<\/em><\/h3>\n

Whilst sharing a similar narrative
\nto South Korea, Taiwan\u2019s roots are relatively less humble, at least in economic
\nterms. The country found itself comparatively intact after fighting it had
\nexperienced in the Chinese Civil War (1946-9) and still contained traces of
\nJapanese colonial efforts to develop: a few textile factories, rudimentary food
\nprocessing plants and handful of developed agricultural exports in pineapples,
\nrice and sugar (Vogel, 1993). Whilst import substitution industrialisation was
\ninitially taken up by the government in order to provide sustainable growth,
\nnegative experiences with inflation meant that a hard-line growth policy was
\nnot implemented until a threat to cut off aid was made by the US in the 1950s
\n(Vogel, 1993). Therefore, the extent to which state intervention was
\nresponsible for Taiwan\u2019s development initially appears unclear.<\/p>\n

The moment demand was deemed
\nadequate by Taiwan\u2019s government, heavy industries such as electronics,
\npetrochemical and steel were rapidly established through heavy investment from
\nthe state (Vogel, 1993). Whilst many businesses that were previously
\nstate-owned were allowed to privatise during this development phase in order to
\ngarner foreign investment and knowledge, these heavy industries remained
\nresolutely nationalised due to being perceived as a vital asset for the
\nre-conquering of mainland China (Vogel, 1993). Yongping Wu voices the idea that
\nprivate small- and medium-sized firms played a crucial part in the economic
\ndevelopment of the country during this era, however the Taiwan government never
\nloosened its hold over the economy and its direction (2004). The most
\nsignificant indicator of this was the state\u2019s control of foreign exchange,
\nwhich constrained private firms\u2019 procurement of imported materials and acted as
\nboth a limit on capital risk and as a way to boost domestic demand for
\nprocessed raw materials (Vogel, 1993). Therefore, although not as
\nall-encompassing as South Korea, the state-led model seems to take precedence
\nover intervention.<\/p>\n

The evolution from the country\u2019s
\nfinal economic development stage into a fully-fledged high-tech industrial
\nstate was rapid. As Taiwan\u2019s competitive advantage in labour-intensive goods
\nappeared to be declining, due to a combination of a rise in competition from
\nChina and a more educated workforce through the late 1970s, the country made a
\npush to advance before it was too late. The government\u2019s role in \u201cthe inception
\nof pivotal technologies and in the export vigour of Taiwan\u2019s information
\nindustry,\u201d (Wang, 1996) along with key large-scale industries such as
\nsemiconductor construction was colossal and resulted in the growth of a
\nsizeable and skilled population of workers who fuelled the service industry and
\ndomestic consumption with their raised disposable incomes. Consequently, when
\ntaking all indicators into consideration, it is clear that the state-led
\ndevelopment can take responsibility for the rapid growth within Taiwan.<\/p>\n

Singapore<\/em><\/h3>\n

Singapore warrants the label of
\nbeing the most \u2018democratic\u2019, if in name only, of the four Tigers in the
\ncountry\u2019s early history: the control Li Guangyao held over the state was so
\nalluring that in the words of a British diplomat \u201cpolitics disappeared\u201d and
\nsimply left an \u201cadministrative state\u201d (Vogel, 1993). This is already a clear
\nindication that the growth the country experienced may have been caused by more
\nthan simply intervention. A considerable amount of Singapore\u2019s development can
\nbe directly attributed to Li\u2019s particular vision and skill, considering that
\nafter the country gained its independence form Malaysia in 1965 he implemented
\n\u201csoft authoritarianism\u201d upon the state\u2019s politics all the way up until his
\nretirement in 2011 (Zakaria, 1994). <\/p>\n

The country\u2019s development pursues a
\nsimilar trajectory to South Korea and Taiwan. Although it had the fortune of
\nnot having to rebound and recuperate from a devastating war, Singapore found
\nitself as a single modern city-state without the means to sustain its people
\ndue to a lack of arable land. Essential goods such as water and food had to be
\nimported which fuelled the need to develop export-focused light industries in
\norder to balance trade (Huff, 1987). Intriguingly, in order to stimulate the
\nlight industry, the government used its resources and capital to attract
\ninternational companies to act as a substitute for the domestic lack of
\nmanagerial and technical knowledge (Vogel, 1993). These policies can clearly be
\nattributed to a state-led model and helped stimulate the country\u2019s expansion
\ninto new markets.<\/p>\n

Heavy industry and manufacturing
\nbecame progressively prioritised throughout the 1970s and 80s, which lead to a
\nremarkable change in the structure of Singapore\u2019s economy (Huff, 1987). This
\nwas mainly triggered by the threat that mainland China\u2019s expanding light
\nindustries under Deng presented to the country\u2019s output and was accelerated by a
\nstate-led model of control through a series of reinvestments of wages in
\ninfrastructure, communications, housing and industry by the Central Provident
\nFund and a raise of the national minimum wage, which resulted in firms having
\nto develop more efficient modes of production (Vogel, 1993).<\/p>\n

Contrasting with the development in
\nSouth Korea and Taiwan, Singapore\u2019s transition into the fourth phase of
\neconomic development was not defined by the growth of a technological industry
\nbut instead by accomplishing Stamford Raffles\u2019 primary vision for the country
\nas the financial and trading centre of Southeast Asia. Like high-tech industries,
\nfinance and trade services demanded highly skilled labour and this, coupled
\nwith Singapore\u2019s advantageous geographic position, resulted in the high-level
\nindustry that marked the country as a wholly economically developed nation,
\njust as technological industries do for Taiwan and South Korea.<\/p>\n

It may be easy to think of
\nSingapore as a stellar illustration of neoliberal market-led development, due
\nto its more liberal markets and the appearance of democracy in the country\u2019s
\nrecent development. However, the crucial role of Li in both economic and
\npolitical direction as well as the significance of the Central Providence Fund
\nin developing the infrastructure required for heavy industry infer that the
\ngovernment was the main engine driving the development observed in the economy,
\nand that more liberal aspects of the market were introduced only in the later
\nstages of economic progress in order to bridge the gap towards a trade and
\nfinancial hub. Therefore, a state-led model of development appears to be
\nresponsible for the majority of Singapore\u2019s growth.<\/p>\n

Hong
\nKong<\/em><\/h3>\n

The city-state of Hong Kong shares
\nmany similarities with Singapore, however it differs in that it is the most
\nlaissez-faire (and consequently market-led) out of the four Tigers. Similarly
\nto Singapore, a lack of agricultural capacity resulted in an urgent need for
\nthe government to balance its trade deficit by quickly developing light
\nindustries and following an export-led industrialisation strategy, however it
\nhas been said that the advancement of Hong Kong through the trade and financial
\nservices stage would have been a logical move regardless of government
\nintervention, due to the country\u2019s origins as a trade port and its connection
\nwith China (So, 1986).<\/p>\n

The significance of the market-led model
\nin the economic evolution of Hong Kong is undeniable, as can be seen in the
\ngovernment\u2019s \u201cpositive non-interventionism\u201d approach to the economy (Yeung,
\n2000). However, there are still a few aspects of its development that can be
\nattributed to the government\u2019s role in driving the economy. Vogel in particular
\nconsiders the distribution of the country\u2019s public funds with a significant
\nportion being allocated for the improvement of infrastructure that would be
\nneeded for heavy industries \u2013 universities, roads, and most importantly
\ndeveloping land for heavy industry use (1993). Furthermore, this all started at
\nleast a decade before any real market-led demand was felt for these public
\ngoods (Vogel, 1993). The government may have appeared to be taking a step back
\nto let the market grow organically, however it is clear they held ideas about
\nthe direction the economy should take.<\/p>\n

Despite being a former entrepot,
\nHong Kong, like Singapore, developed to the extent that it became a chief
\nindustrial manufacturer as well as a financial hub for the region (So, 1986). It
\nis somewhat of an outlier among the Asian Tigers in that the country
\nconsistently held a laissez-faire approach to the global market and can
\ntherefore be considered as sharing the most similarities with a market-led
\nmodel of development. However, the role the government played in stimulating
\nthe economy to develop beyond its initial phase cannot be overlooked, and
\ntherefore the significance of state intervention should not be ignored.<\/p>\n

Evaluation<\/em><\/h3>\n

Whilst the previous section has
\ndetermined whether state-intervention is more responsible for economic
\ndevelopment than the other models, this section aims to evaluate why the
\nrelevant development models were so successful in stimulating growth within
\neach of the four Asian Tiger economies. When taking into consideration the
\nindividual paths to development they took, it is clear that the overarching
\nmodel most applicable to each economy was that of the state-led development
\nmodel. Although Hong Kong took a market-led approach to some extent, each state
\nworked to push development ever further instead of settling into a particular
\nset of industries, by re-investing in the capital and infrastructure within
\nemerging industries and also protecting said industries from the international
\nmarket until they were large enough. Therefore, it can be said that a state-led
\ndevelopment model, rather than simply state-intervention, was responsible for
\nthe miraculous growth observed within the Asian Tigers. However, a further
\nquestion presents itself; why was the state-led model was so successful within
\nthese particular states? Indeed, similar situations in Latin America and the
\nUSSR at the time did not lead to the exorbitant growth that was experienced in
\nSouth Korea, Taiwan, Singapore, and Hong Kong (Lall, 1996). Consequently, the
\nfollowing analysis will look into several factors that might explain why the state-led
\ngrowth was responsible for development within the Tigers, rather than
\nstate-intervention.<\/p>\n

The first factor that contributed
\nto the triumph of state-led growth within the Tigers is that of the shared
\nConfucian culture within the region (Tai, 1989). Traditionally, many economists
\nviewed the religion as an inherent barrier for economic development, due to its
\nhistorical ties to feudalism that directly oppose contemporary capitalism
\n(Mascelluti, 2015). However, the importance placed upon the collective family
\nand social hierarchy within Confucianism could be said to instil the mindset
\nneeded to endure the sacrifice of individual economic interest in favour of the
\ncountry\u2019s prosperity, an attitude which appears prevalent within the Tigers
\n(Shirley, 2014). This idea of sacrifice opposes the ideas observed in the
\ninterventionist model, where only policies which benefit rational actors will benefit
\na state\u2019s economy overall. Furthermore, the viewing of the government as a
\nhigher power and the value placed upon education also helped bolster the feat
\nachieved by each of the Tigers\u2019 long-term economic goals (Mascelluti, 2015).
\nConversely, in other parts of the globe, it could be predicted that submission
\nwould not be so easy due to individuals being deficient of this unique outlook.
\nThis may explain why government-led growth may not be so successful elsewhere.<\/p>\n

The second factor explaining why state-led
\ngrowth was so effective within the Asian Tigers is that education was viewed,
\nto some extent, as crucial to the development of the economy by each of the
\nfour countries. As the demand for secondary and tertiary education drew
\nthroughout the 1970s, each state started to invest in these institutions, and
\nby 1986 secondary school enrolment rates had increased dramatically, reaching
\n95 per cent in South Korea (Mascelluti, 2015). This increase in the proportion
\nof an educated labour force resulted in more individuals seeking higher skilled
\njobs in burgeoning industries, which helped the state-led development strategies
\nby growing these industries until they no longer needed to be sheltered from
\nthe international market (McLoughlin, 1985). Furthermore, a more educated
\nsociety typically results in a more efficient and stable economy, translating
\ninto higher growth (Overholt, 2011). Therefore, it is clear that each of the
\nTiger states\u2019 decision to invest in education provided a stable and
\nadvantageous foundation from which government-led development, and therefore
\neconomic growth, could thrive.<\/p>\n

The third and arguably most
\nimportant factor in explaining the success of the state-led development model
\nis that of the political strength demonstrated by each of the Asian Tigers\u2019
\nleaders. Each of the four states possessed legitimate central governance that
\nprovided the ability to consistently direct the development of the markets
\nwithout any noteworthy domestic challenges (Shirley, 2014). In the case of
\nSouth Korea, their government\u2019s authority was founded upon \u201cforced unity\u201d in
\nopposition of the North (Vogel, 1993). Consequently, the prosperity of the
\nSouth could be easily measured by its citizens by their economic position in
\ncomparison to the North. With regards to Taiwan, much of the country\u2019s status
\nis focused around the state\u2019s connection with China. Found both in leadership
\nand the population, Taiwan\u2019s competition with its neighbour supplied the
\nlegitimisation for uninterrupted GMD rule (Vogel, 1993) and, similarly to South
\nKorea, provided an effective economic focus to the government. The connection
\nbetween the success of government-led growth within Hong Kong and Singapore and
\nthe intentions of their individual governments is an all the more basic case of
\nsurvival. Due to their small size, neither possess the agricultural means to
\nprosper as self-sufficient states. The two states\u2019 leadership legitimacy was
\ntherefore founded upon the sustained survival of the countries\u2019 economies.
\nTherefore, to some extent, in all four states the legitimacy and furthering
\nprosperity of the government depended on the constant financial attainment they
\ncould securely deliver to the population. As a result of this, each government
\nhad a large incentive to fervently and continually pursue sustainable
\ndevelopment (Wade, 2004). Therefore, instead of implementing interventionist
\npolicies to promote moderate development in an otherwise market-led economy, as
\nwould be the case in an interventionist model, the state-led development model
\nwas responsible for significant and sustained growth throughout the period.
\nFurthermore, due to each government not founding their legitimacy on either
\ndemocracy, which could create volatility and an absence of long-term goals, or
\nideology, which leaves no room for adjustment due to the combining of
\ndevelopment and a fixed path, this permitted each Tiger state to achieve
\npermanent sustainable growth (Wade, 2004). <\/p>\n

Consequently, it can be clearly
\nseen why the state-led model for economic development, rather than the
\ninterventionist model, was responsible for the growth observed within the Asian
\nTigers. Their shared culture, stances on education, and strong political
\nleaders, all played a role in cultivating the perfect climate in which the state-led
\nmodel thrived. The approach the Asian Tigers took to development is therefore
\nbest surmised as \u201csuccess due to coherent and flexible policies, effective
\nimplementation by the state\u2026 and political capacity to insulate economic
\nplanning from competing interests\u201d (Shin, 2003).<\/p>\n

Conclusions<\/h2>\n

When considering the extent to
\nwhich state intervention was responsible for the economic growth of the Asian
\nTigers, it is clear that its impact was small. Rather, an intense state-led
\ndevelopment model, using well-defined plans and investment strategies, had a
\nmuch larger effect in stimulating growth within the majority of the countries.
\nThis model defines a powerful central government that employs varying
\nstrategies to stimulate development despite the desires of individual workers,
\nas opposed to the Neoliberal model\u2019s market liberalisation and the Keynesian
\nideas of government intervention. Whilst an interventionist development model
\nis a viable option for growth, in this instance the state-led development
\nstrategy of nationalisation and substantial investment in fledgling industries
\nwas crucial to the rapid industrialisation and economic growth of the Tiger
\nstates. Whilst Hong Kong appeared to lean the most towards a market-led model,
\nit is clear that the neoliberal ideas supported by the 1993 World Bank report
\ncan be rebuked and that the state-led model of economic development was the
\nmost responsible in developing the Asian Tigers far beyond their predicted
\nmeans.<\/p>\n

The success of the state-led development
\nmodel is due to a manifestation of unique cultural values and a focus on the
\nimportance of education. It is also due to the particular stresses placed upon
\neach government to solidify their legitimacy by developing the economy. This
\ndependence upon the development of the markets for legitimacy instead of
\nideology or democracy permitted the Tiger states to achieve stability and flexibility
\nwithin their long-term goals, which successfully aided in their development.
\nThe Asian Tigers allow us to observe an illuminating alternative to the most
\ncommon classical developmental approaches considered in state-building
\nexercises, that normally stress the significance of liberal values such as
\nmarket-led growth and democracy. Reproducing their accomplishments may be
\nachievable, however it will necessitate a complete change in our attitude
\ntowards development economics and our notion of the connection between a
\ngovernment\u2019s legitimacy and competence. <\/p>\n

Bibliography<\/h2>\n