Development strategies and economic performance of the dynamic Asian economies: Some comparisons with Latin America

The Role of Policy in Economic Development: comparisons of the East and Southeast Asian and Latin American experience

“…The East Asian countries engaged early-though with varied timing-in a comprehensive strategy that involved not only supportive effective exchange rates but numerous other measures, such as tax concessions, incentives to investment, guarantees of protection in the domestic market, preferential financing, etc. in an effort to attract foreign investment and to expand production for the export market (Naya 1990;Naya and Imada 1990;Hirata and Osada 1990;Lin 1988Lin ,1989. 'More than anything else, the distinguishing feature of the Asian-Pacific developing countries is their emphasis on exports' (Naya 1990:159).…”

“…Outward orientation, when implemented, benefited Latin American economies as well as the East Asian. Brazil was among the more successful developing countries in the 1970s while pursuing market-oriented, exportpromoting policies, but then turned increasingly inward and suffered from deteriorating economic growth (Naya and Imada 1990). Fujisaki, et al (1990) go on to argue that the recent improvement in economic performance of Chile, Colombia, and Mexico can by traced to their increased export promotion which has raised their export ratio as well as their savings and investment to GDP ratios.…”

“…Import-substitution policies played a role in the early development of both the East Asian and Latin American economies in the 1950s. The difference lies in the timing of the critical choice between deepening import-substitution efforts and moving towards export-promotion policies, once primary import substitution had run its course (Adams 1990;Bhagwati 1986;Naya 1990;Naya and Imada 1990;Lin 1989).…”

“…When primary import-substitution industrialization had run its course, Latin American countries chose to deepen importsubstitution efforts thereby imposing unnecessary burdens on their economies. When Latin America finally did begin to turn to promoting exports in the 1970s, the disequilibrium resulting from protectionism, unemployment and overvalued exchange rates, made it difficult to provide the incentive structure that had been so successful in the Asian economies (Montemayor and Solis 1986;Ranis 1990;Ranis and Orrock 1985;Lin 1989;Naya and Imada 1990;Naya 1990;Balassa 1988;Macomber 1987).…”

“…As Ranis has suggested, a country's development prospects may well be inversely proportional to its natural resource endowment!l2 Resource-rich countries have, by definition, a comparative disadvantage in manufacturing. A wealth of natural resources can have other adverse effects on economic growth, creating vested interests and causing land tenure issues (Mahon 1992;Hein 1992;Naya and Imada 1990;Naya 1990;Ranis 1990;Kaufman 1990;Bianchi and Nohara 1988;Ranis and Orrock 1985). Natural resource wealth can also make a country vulnerable to commodity price fluctuations, and therefore often leads to unbalanced macroeconomic policy (Sardi 1989).13 Most importantly, the 12 Arndt (1989:14).…”