Asia's Growth Model Still Holds True

With the proverbial benefit (and embarrassment!) of hindsight, it is clear that the patterns of growth that occurred over the last half-century were little understood and rarely (if ever) forecast by economists. At the very moment in the 1960s when Asia's tiger economies were beginning to take off, for example, the Nobel laureate Gunnar Myrdal, wrote his The Asian Drama to diagnose the causes of Asian poverty and to explain why its poverty appeared to be ineradicable.

Simultaneous to this, a strong consensus developed among economists and policymakers that favored the import substitution policies then being pursued by countries including India, Argentina, Brazil, Egypt and Turkey. After beggaring their adherents, these policies are now utterly discredited.

The key point here is not only that economists got so much wrong, but that almost no one got things right. Take the phenomenal growth of Taiwan? No one predicted it. Indeed, Japan's economic ``miracle'' went unnoticed by the economics profession until Norman Macrae of The Economist published his seminal ``Consider Japan'' article in 1962.