Export Growth and Industrial Policy: Lessons from the East Asian Miracle Experience

Abstract

The lessons from the high growth or ‘Miracle’ experience of the newly industrialized economies (NIEs) have been discussed extensively. This paper focuses on a particular and controversial aspect of this story – role of export growth and industrial policy – with the latter defined broadly to cover a range of interventions to change the structure and raise the growth of exports. It asks what are the lessons for today’s policy-makers in the East Asian region from this experience. The international environment is now very different from the early 1960’s, when the rapid growth of manufactured exports from the first tier NIEs started to arrive on world markets. Forces of globalization of both trade and capital flows are now much stronger, intra-regional trade is now far more significant and transnational firms have now established elaborate production networks, both globally and within the region. The rules and dispute procedures governing international trade have been strengthened by the emergence of the World Trade Organization (WTO). Also ideas relating to economic policy and the most effective means of stimulating economic development are now very different with a greater awareness of the potential costs of interventions to control or over-ride markets. Nonetheless the paper suggests there are some policy lessons from this look at recent economic history, which are different for economies at different stages of development.