The East Asian Miracle: Four Lessons for Development Policy

Four public policy lessons of the East Asian miracle are examined. The argument is made that eight East Asian economies can be distinguished from other developing countries on the basis of three common characteristics-rapid, persistent, and shared growth. A growth accounting exercise based on cross-country data indicates that while accumulation was the primary source of growth, total factor productivity (TFP) change was also significant. Macroeconomic stability and broad-based education are found to have contributed significantly to both accumulation and TFP change. The conclusion is made that manufactured export orientation rather than industrial policy played the dominant role in increasing economywide TFP growth rates.