What are the lessons that can be drawn from the remarkable success of the Asian Miracle economies of Korea, Singapore, Taiwan and others over the past half century, moderator Ian Welsh asked economists Reda Cherif and Fuad Hasanov of the International Monetary Fund (IMF) at the opening panel of IFC’s Second Manufacturing Conference.
The Asian Miracle economies emphasized exports and home-grown technology.
“The main message we have,” Cherif said, is that the Asian Miracles emphasized exports and home-grown technology. These countries, he said, “were not relying solely on FDI (Foreign Direct Investment). They built their own companies, they created their own technologies and they produced a lot of patents themselves very quickly.” The Asian Miracles, both economists said, focused their energies exactly on the sectors where R&D intensity is high—computers, electronics, IT and automotive. “These are the sectors that take you to the next level,” Cherif said.
Asked whether government policies help or hinder progress, Hasanov stressed the positives of private-public partnerships. “Government can act as a coordinating body to bring all the firms together and kind of create the sector.” Even in advanced countries, he said, developing an export base can be daunting. “You need export promotion agencies. That is another kind of help that the state can provide.”
Cherif said that the Asian Miracle economies largely relied on a three-part recipe for their success.
- Part One: “All of these countries used state intervention to push resources and firms into more and more sophisticated sectors.”
- Part Two: “All of these countries were obsessed with their exports and they really pushed their firms to export all the way.”
- Part Three: “In return for [government] support, these firms had to show pretty quickly results in terms of export, in terms of innovation, in terms of efficiency, but also they applied a very fierce competition abroad and inside the country,” Cherif said.
Also, Cherif noted, “you have to think about the backward linkages. So, you can think of agriculture as the business of growing things, but it involves biotechnology, it involves irrigation, sometimes it involves satellite technology to predict weather,” he said. That is part of the dimensional thinking that helps economies grow in complexity. “These are the things that will help you grow much faster.”