Twofish's Blog

August 11, 2009

There is no Asian Development Model

Filed under: china, finance — twofish @ 1:18 am

There is no Asian development model and talking about one obscures confuses things greatly.  The Japanese economy is as different from the economy of Hong Kong as one can possibly get.  The one thing that Japan has in common with Hong Kong is that both ran massive trade surpluses with the United States, but then again everyone runs massive trade surpluses with the United States, and so relations with the United States has more to do with the United States than with Hong Kong or Japan.

Also Germany and Saudi Arabia ran trade surpluses with the United States, but no one calls them Asian.  It is true also that most countries in East Asia feel more comfortable with government intervention with the economy than the United States, but again that’s a peculiarity of the United States than with East Asia.

The problem with talking about an Asian development model is that people see something that Japan does and assumes that China does the same thing and vice versa which is not true.  For example, because Japanese companies have captive banks in a corporate group structure people assume that Chinese companies do the same thing, when this is not the case.  In  fact that Chinese banking system has many more similarities with the United States than it does with Japan, largely because the critical era in which major decisions where being made happened between the Japanese property crash and Enron.

The problem with talking in terms of development models is that you end up with two or maybe three models, and that ignores the fact that there are many ways of getting it right and many ways of getting it wrong.

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3 Comments »

  1. You are absolutely right, but there is one major similarity between many of the Asian economies and that is that they started out as export-driven. That alone is not necessarily a big thing in terms of where they are going, but it is something.

    Comment by Dan — August 11, 2009 @ 5:19 am

  2. Except that the Mainland Chinese economy has never been strongly export driven, which is why it’s doing much better than people expected.

    Also the South Korean and Taiwanese economies didn’t start out export driven economies. In the 1950’s, South Korean and Taiwanese economic policy was based on import substitution. They only become export driven in the early-1960’s, partly out of accident.

    The Japanese economy was rather strongly export driven post-WWII, but it wasn’t pre-WWII. One thing that is forgotten is that Japan industrialized pre-WWII, and by the time of WWII, Japan was already a major industrial power (which is what led to WWII).

    Comment by twofish — August 11, 2009 @ 12:32 pm

  3. “The Geography of Thought” might be of interest to you. I have a refreshed perspective after reading that book and I’m sure you will as well.

    Keep up the great work.

    Comment by Nino — August 15, 2009 @ 4:45 am


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