The Asian Miracle and Modern Growth Theory

Abstract

The article argues that the rapid growth in a number of Asian economies that occurred between 1960 and 1996 was accompanied by a major change in the structure of their economies including shifts in the size of firms and the sectors of specialisation. These changes were a fundamental component of the growth process. While capital accumulation was an important source of growth, its productive assimilation was a critical component of the success of these economies. Estimates of the contribution of total factor productivity to aggregate growth that neglect these phenomena may lead to erroneous estimates.

Types of Entrepreneurship and Economic Growth

“…In traditional models of 6 economic growth investment in capital, labour and technology is sufficient to realize economic growth. New models of economic growth see these investments as a necessary complement to entrepreneurship/innovation, but not as a sufficient explanation for economic growth in its own right (Nelson and Pack 1999). One could even argue that high rates of investment in human and physical capital are themselves stimulated by effective innovation, and cannot be maintained in the absence of innovation.…”

“…Next to productivity growth and technological change in established sectors, the development process in less advanced countries is largely about structural change (Nelson and Pack 1999;Rodrik 2007;Gries and Naudé 2008). A process in which an economy finds out-selfdiscovers-what it can be good at, out of the many products that already exist.…”

“…If the build-up of capacity to this level of critical mass is not reached due to the lack of complementary investments, there might be a role to play for governments to overcome coordination failure, for example by providing investment guarantees for entrepreneurs (see Rodrik 2007). Such industrial policy is not about 'picking winners' or comprehensive planning, but encouraging experiments with new types of economic activity (Rodrik 2007); since it is impossible to judge winners and losers in advance, competent and growth-oriented entrepreneurs should be encouraged to try, success rewarded and failure not coddled (Nelson and Pack 1999). These clusters do not have to be close to the technology frontier (as in advanced capitalist economies).…”

The New Imperative of Innovation: Policy Perspectives for Latin America and the Caribbean

“…Although new ideas and inventions are reported ever more rapidly in today's interconnected world, it is a well-established fact that mere availability and sometimes even awareness of how better to produce or organize things is a far from sufficient condition for adopting new ideas and know-how in practice, in production, and in the economy. Adopting and absorbing existing technological innovations is an uncertain and risky process that is costly for firms and requires accumulation and assimilation of both physical and human capital (Nelson and Pack, 1999;Comin, Hobijn, and Rovito, 2006). 11 In addition, a significant share of the knowledge important to the economy and development is tacit, meaning that it cannot be codified, explicitly documented, or transmitted outside direct personal interaction.…”

Gender Inequality in a Globalizing World

“…1 These countries recognized that reliance on exports of low cost manufactures and primary commodities would not on its own lead to higher incomes or move their economies up the industrial ladder to the production of more skill-intensive goods that could ratify higher wages. South Korea and 1 For detailed discussions of South Korea and Taiwan's development strategies as late industrializers, see Amsden (1989Amsden ( , 2001, Wade (1990), Nelson and Pack (1998), and Akyüz et al (1998).…”