Economic Growth in Asian Countries!
In recent years (between mid-sixties to the end of eighties, that is, during 1966-1990).
The rate of economic growth in the four Asian countries, namely, Hong Kong, Singapore, South Korea and Taiwan has been so remarkable that they are popularly known as Asian Tigers.
It will be seen from Table 2.2 that growth rate in GDP per capita in these countries has been within the range of 5.7 to 6.8 per cent per annum. It has been mentioned with pride by some leaders of these four Asian countries that they have learned a ‘special trick’ to grow more rapidly that is worthy of emulation by the other poor developing countries.
However, some economists, especially Alwyn Young have found that there are no ‘special tricks’ used by these countries to achieve remarkably high rates of growth in per capita income. Instead, they have relied on well-known factors determining growth, namely, using more labour input, saving and investing more, and expanding education of work force and thereby building more human capital.
An important fact about determinants of growth which is noteworthy is that that growth in total factor productivity (TFP) (by which technical progress is generally measured) has been high but not remarkably high. We give data about these variables of growth of these so called Asian Tigers in Table 2.2. It will be seen that all these four countries have remarkably high growth rates in GDP per capita but their growth is explained by increased inputs (that is, by use of more labour input, more human capital, i.e. increase in education and correspondingly more physical capital) and not by much higher increase in total factor productivity (TFP).
It may be noted that change in total factor productivity measures the change in output per unit increase in inputs and represents technological progress. Although the change in total factor productivity in these countries (except Singapore) is high but not remarkably high and therefore cannot explain remarkably high growth rate in per capita GDP achieved by them. Total factor productivity growth rate in Singapore is very small but still its growth in per capita GDP has been very high (6.8 per cent per annum).
It will be seen from Table 2.2 that in all these four countries there has been a very large increase labour force participation rate indicating use of more labour input in the production of goods and services. It is noteworthy that much of this increase in labour force participation rate has been due to more women joining the labour force. Each of these countries substantially increased its human capital. In fact education level of these countries reached close to those of rich industrialized countries.
Another important feature of these East Asian countries is that they have pursued outward- looking economic strategy (i.e. promoting exports to generate growth) and followed laissez-faire free market policies with emphasis on competition as driving force of growth with the exception of Singapore where Government played a significant role in regulating and controlling private enterprise and direction of investment. Moreover, Singapore relied on foreign direct investment to bring in new technologies.
To sum up, in the history of economic development these four Asian Tigers have achieved extraordinary high growth rates, and that too with the well-known way through using more labour input, more investment in capital, both physical and human, and fostering competition.
It is reassuring to note that these former poor countries will soon catch up with the developed industrialized countries in per capita income level. Singapore has already achieved per capita income level of the rich industrialized nations of the world.
It is important to note that since 1991, China and India too have registered a higher growth rate and have become the two fastest growing economies of the world. India achieved 6.2 per cent growth in GDP during 1992-2006 and further its annual growth rate during three year period, 2004-2007 rose to over 9 per cent per annum. In 2009-10 and 2010-11, India’s growth of GDP has been 8% and 8.6% respectively. In fact India is now the second fastest growing country of the world, next only to China.