The Role of Instituions in Asian Development

Ha-Joon Chang is professor of economics at the University of Cambridge.
The article was originally prepared for the

Asian Development Bank for its project on Asian Crisis and Institutional Changes. The author thanks Haider Khan
for his extremely helpful comments in the designing stage of the paper and an anonymous referee for his useful
comments.
Asian Development Review, vol. 16, no. 2, pp. 64-95 1998 Asian Development Bank
The Role of Institutions
in Asian Development
|a-Jccr C|ar
Abstract. The paper identifies three types of institutions that are particularly
important for economic developmentinstitutions for coordination and administra-
tion, institutions for learning and innovation, and institutions for income redistribu-
tion and social cohesionand examines how they contributed to the development of
different Asian countries. While developing countries can import and adopt some
institutions from more developed countries, there is no best practice institutional
structure that fits every country. Applying this conclusion to the current situation in
Asia, it is argued that despite the currently popular argument that Asian countries
should remodel their institutions along the Anglo-American line, institutional
changes need to be made cautiously and in line with local conditions.
Introduction
he role of institutions in economic development has attracted a lot of atten-
tion in development policy debates during the last decades. One force be-
hind this new interest is obviously in the more academic domain, namely,
the rise of institutional economicsof many varieties, but particularly the
so-called New Institutional Economics (NIE)during the last 20 years or so (see
Eggertsson 1990 for a review of the NIEs, and Hodgson 1988 for a review of the
broader institutionalist literature). However, it should be emphasized that a number
of development policy debates, in fact especially concerning the Asian experiences,
have also been important in raising interest in the role of institutions in economic de-
velopment.
Firstly, it has become increasingly clear over the years that the spectacular
successes of the East Asian countries of Japan and the so-called first-tier Newly
T
The Role of Institutions in Asian Development 65
Industrialized Countries (NICs)
1
and then of the second-tier NICs of Southeast Asia
2
could not be easily explained by pure market economics (with the obvious exception
of Hong Kong, China).
3
This has raised the question: what, if not the market? The
obvious answer to this question was the strong, probusiness developmental state, and
especially the elite bureaucracy as its core institution, although more recently the role
of nonstate institutions, such as local networks, has also attracted attention (see the
articles in the special symposium in World Development [1996, 6]).
4
Secondly, in contrast to the East and the Southeast Asian experiences, market-
oriented reforms in many developing and transition economies over the last two
decades have often dismally failed. This has prompted people into asking whether
there has to be something more than simple liberalization and privatization if the
market economy is going to get established and to develop in a developing country
(Banuri 1991 makes some important early critiques). The failure to establish gener-
alized morality that is needed for the establishment of universal and stable exchange
relationships (Platteau 1994), as well as the institutional hiatus in these economies
(the term is due to Kozul-Wright and Rayment 1997) created by the destruction of
existing institutions in the reform process were identified as reasons behind the fail-
ures of market reform in many developing and transition economies.
Thirdly, the financial crises in certain East and Southeast Asian countries have
also highlighted the issue of role of institutions. The International Monetary Fund
(IMF) and its supporters argued that the crises in these countries were not the result
of macroeconomic mismanagement (of which there was relatively little), but their
pathological institutions, such as corrupt governmentbusiness relationship (crony-
ism), overly geared and overly concentrated corporations, company-based welfare
systems, and distorted financial systems. As a result, in its program for the crisis-
stricken Asian countries, especially the one for Korea, the IMF has gone beyond its
usual demand for liberalization and privatization, and implemented programs that
required institutional transformation to an unprecedented extent (see pages 82 to 88
for the sections on financial institutions and rules of competition; also see Chang
2000b).
1
These are Hong Kong, China; Republic of Korea (henceforth Korea); Singapore; and Taipei,China.
2
These include Indonesia, Malaysia, and Thailand.
3
The early mainstream position that the East Asian countries developed on the basis of free markets is well
summarized in Balassa (1982), Little (1982), Lal (1983), and Balassa (1988). Important works that questioned this
orthodoxy in the earlier phase of this debate include Magaziner and Hout (1980), Johnson (1982), and Dore (1986) on
Japan; Amsden (1985) and Wade (1990) on Taipei,China; and Jones and Sakong (1980), Luedde-Neurath (1986), and
Amsden (1989) on Korea. The earlier phase of the debate is reviewed in Chang (1993). Subsequently, the World
Bank published its famous East Asian Miracle report (World Bank 1993) and sparked off a new phase of the
debate. See Fishlow et al. (1994), the special section in World Development (1994, 4), and Akyuz et al. (1998) for
criticisms of the Miracle Report.
4
See Johnson (1982) for a seminal work in the literature on the role of the elite bureaucracy in Asian devel-
opmentin his case Japanese; also see Dore (1987). More recent works include Evans (1995), Campos and Root
(1996), World Bank (1997), and Cheng et al. (1998).
66 Asian Development Review
Drawing on the abovementioned literature, this paper aims to shed more light
on the role of institutions in economic development by looking at the experiences of
various Asian countries. In the second section, the paper provides a brief theoretical
overview on the role of institutions in economic development. In the third section, we
identify three types of institutions that are particularly important for economic devel-
opment: institutions for coordination and administration, institutions for learning and
innovation, and institutions for income redistribution and social cohesion. Then we
examine how the above three groups of institutions contributed (or not) to the devel-
opment of various Asian countries, with emphases on the first two types of institu-
tions. Examples will be drawn from three groups of Asian countriesnamely, East
Asia, Southeast Asia, and South Asiaand comparison between them made wher-
ever appropriate and instructive. The fourth and last section of the paper draws some
general lessons from the discussions and also provide some proposals regarding what
kind of institutional reforms will maximize the development potential of various
Asian countries, given their changing domestic and international conditions.
A Brief Theoretical Overview
The role of institutions has always been a matter of concern for those who are
interested in development issues. Needless to say, for social scientists other than
economists interested in development, the issue of institutions has long been a central
concern, but in the rise of development economics as an independent subfield of
economics during the early postwar period, the concern for institutional issues also
played a critical role. After all, the rise of development economics started from the
very recognition that the rules (or institutions) governing the behavior of economic
agents in developing countries are fundamentally different from their counterparts in
the advanced countries (Hirschman 1981 provides a lucid review of the early devel-
opment literature and its subsequent demise).
Unfortunately, the rise of neoclassical development economics between the late
1970s and the mid-1980s, which emphasized the universality of human rationality
and hence the applicability to developing economies of economic theories developed
for institutions of advanced economies (with marginal modifications), resulted in a
temporary waning of interest in the role of institutions in economic development
(Little 1982 and Lal 1983 are classic expositions of neoclassical development eco-
nomics; see Toye 1987 for a criticism). However, as pointed out earlier, this trend
has been reversed during the last decade or so, as seen in the explosion of the eco-
nomic literature on the role of institutions in development (for a review of the recent
literature, see Lin and Nugent 1995).
One central conclusion that emerges from the recent debate on the role of in-
stitutions in development is that the analysis of institutions is not some optional extra
that economists can bring in as an afterthought following the fundamental analysis
of the market, but is essential in understanding the workings of the market economy
(Polanyi 1957 is a classic statement of this point; also see Coase 1988 and 1992, and
North 1990 and 1994).
For one thing, a well-functioning market is a collection of institutions regulat-
ing things like:
(i) what can be traded (e.g., many countries ban transactions in blood or
human organs, not to speak of human beings themselves);
(ii) who can trade (e.g., many countries ban children from participating in
the labor market, or only qualified people can sell legal or medical
services in all countries);
(iii) what constitute fair trading (e.g., rules against fraud or misinforma-
tion); and
(iv) how much prices can vary (e.g., many commodity and stock markets
suspend trading when prices fall too much too quickly) (for more
details, see Chang 1997b and 2000a).
The functioning of markets, in turn, is affected by the nature and the effective-
ness of a range of nonmarket institutions that surround them, such as:
(i) state institutions providing societal coordination;
(ii) nonmarket property rights (e.g., rules regulating the use of common
property can affect the functioning of rural factor and product
markets);
(iii) general code of conduct (e.g., the level of honesty prevailing in a soci-
ety can influence the effectiveness of rules regulating fraud in a par-
ticular market);
(iv) business corporations (which suspend the market logic within them-
selves) and their associations (which coordinate the interests of their
member firms through nonmarket measures); and
(v) rules governing governmentprivate sector interactions.
The second central conclusion that emerges from the recent academic debate on
the role of institutions in economic development, although it is often forgotten even
by some of those who accept the importance of institutions, is that institutions do not
spontaneously emerge, especially in the short run, simply because there are demands
for them. Although there are cases where such induced institutional innovation do
occur (see Hayami and Ruttan 1995), institutions often require deliberate construc-
tion. Needless to say, this does not imply that the process of such construction can be
planned in any detail, because there are a lot of evolutionary characteristics in the
development of institutions. However, the process of institutional evolution is not a
completely random one, and conscious planning and learning plays an important role
in this process. Indeed, institutional borrowing and adaptation has been part and par-
cel of the developmental process in any late-developing country following the In-
dustrial Revolution and the birth of capitalism. This, in turn, means that historical
and comparative perspectives are essential in understanding the evolution of
institutions.
The failure of recent reforms in many developing and transition economies,
which aimed to revive the economy by emancipating the dynamism of markets
through privatization, deregulation, and opening-up, has only highlighted the impor-
tance of institution-building in the process of economic development. In these coun-
tries, as the market institutions themselves and the nonmarket institutions that
support them were inadequately developed, freeing the markets did not lead to
economic dynamism. The experiences of many Asian countries, at least until their
recent liberalization, have shown that, in developing (or transition) economies a de-
liberate nurturing over time of the markets and their supporting nonmarket institu-
tions may be better than a hasty market liberalization, which may in fact undermine
whatever little institutional basis for a healthy market economy there was in these
economies.
The Asian Experiences
In this section, we discuss the institutions that have been important in the
development experiences of various Asian countries. Without claiming to be exhaus-
tive, we identify three types of institutions: (i) institutions of coordination and
administration; (ii) institutions of learning and innovation; and (iii) institutions of
income redistribution and social cohesion.
Institutions of Coordination and Administration
There can be little dispute that complex modern societies need an elaborate
network of institutions that coordinate the potentially conflicting decisions of indi-
viduals and groups with diverse objectives and behavioral patterns. The dispute is
about, firstly, the exact institutional mechanisms that can best do the job, and, sec-
ondly, whether such mechanisms will spontaneously emerge when they are needed.
Traditionally, there had been two major camps on these issues. On one hand,
there have been those who believe that the decentralized coordination mechanism of
the market is the most efficient institution of coordination and that such mechanism
will emerge with little difficulty when there are gains from trade to be made, even in
countries with little prior experience of the market economy. On the other hand, there
have been those who believe that market mechanisms either do not exist or malfunc-
tion in developing countries, and therefore the government has to intervene to fill
such gaps by playing the role of coordinator.
More recently, however, a third position has emerged, which says that neither
market nor the government can achieve all the complex coordinatory tasks that are
required in complex modern societies. Those who support this positiona position
that is taken by the present paperargue that markets and governments are just two
of many institutions of coordination and administration and that business corpora-
tions, industrial associations, labor unions, governmentprivate sector consultation
bodies, and so on, are all important institutions of coordination.
Those who support this third view argue that therefore we need to look at:
(i) the constituent institutions that make up the market and the state (e.g., property
rights and trading rules for the market and the bureaucracy for the state); (ii) non-
market, nonstate institutions that perform the function of coordination and admini-
stration (e.g., business corporations, business associations, labor unions, government-
business consultation bodies); and (iii) the interrelationship between different types
of institutions of coordination. In other words, what we call the institutions of coor-
dination and administration comprise not just the market or the state, but also an
array of nonmarket, nonstate institutions.
Having acknowledged the importance of nonmarket, nonstate institutions of
coordination, we focus our attention on two state institutions, whose importance has
been emphasized in recent debates on the East Asian experience. They are the gov-
ernment bureaucracy, which is the central institution that makes up the state, and the
institutions that provide state-business links.
In the case of certain East Asian countriessuch as Korea; Taipei,China; and
Singaporethe high quality of general administration and the proactive role of the
elite bureaucracy in designing and implementing effective national and sectoral de-
velopmental plans have been identified as crucial factors behind their economic suc-
cesses. In contrast, in some other Asian countries, especially in many South Asian
countries but also in the Philippines, the bureaucracy has been identified by many
people, rightly or wrongly, as an obstacle to development, for reasons that vary ac-
cording to the country. Further still, in the cases of Indonesia and Thailand, the qual-
ity of their bureaucracies in general has been frequently questioned, but many people
assert that their elite bureaucrats (who are frequently known as technocrats in these
countries) have played the role of the guardian of macroeconomic stability and ex-
port growth, against the constant pressure from the political elite who wanted more
redistributive policies and grandiose industrial schemes.
As for the role of the institutions that provide publicprivate interface, it has
been frequently suggested that the states in the East Asian countries were independ-
ent of private sector sectional interests, but still maintained a close relationship with
the private sector as a whole through a network of formal and informal institutions.
In contrast, in some Southeast Asian countries, the stateprivate sector relationship is
regarded to have been both too close and too far at the same time. In these countries,
the ethnic differences between the political elite and the business elite meant that the
only viable stateprivate sector relationship was based on case-by-case patronclient
relationships. This, in turn, meant that the state in these countries has been often too
far from the private sector as a whole but has been too close to certain favored
private sector agents. In the case of many South Asian countries, similar patron
client relationships have existed, although in a more antagonistic overall relationship
between the state and the private sector.
5
Role of General Administration
A lot of the tasks performed by the state are of a routine nature. Of course, that
some activity is of a routine nature does not mean that it is less essential than more
creative tasks performed by what are frequently called pilot agencies manned by
elite bureaucratsas symbolized by the famous Japanese Ministry of International
Trade and Industry or the Korean Economic Planning Board (see pages 72 to 74 on
the role of pilot agencies).
Routine is what provides stability in an environment and is a precondition for
human agents with bounded rationality to perform any creative activity, as without
some fixed points in life, they will not be able to cope with the complexity of the
world (the concept of bounded rationality is due to the Nobel Laureate Herbert
Simon [see Simon 1983 for a lucid and reader-friendly exposition of the idea]). The
routine aspect of government activity can be summarized in the notion of general
administration, which involve things like maintenance of order, disbursement of
justice, collection of taxes, basic record keeping, and day-to-day running of the
government machinery.
The abilities of different Asian countries in the area of general administration
have been varied. At one extreme, there are countries like Hong Kong, China and
Singapore; to a lesser extent Korea; and Taipei,China where the general administra-
5
It should be noted that the stateprivate sector antagonism in the South Asian countries (despite their ethnic
heterogeneity) has owed more to ideological and class differences than to ethnic differences as in the case of certain
Southeast Asian countries.
tive capability is highly regarded. At the other extreme, there are countries like Indo-
nesia, Philippines, and Thailand, where such capability has been seen as problematic
(Campos and Root 1996, ch. 6), not to speak of countries like Bangladesh, where
such capability is extremely meager.
What has attracted a lot of attention in this regard is the relative effectiveness of
state administrative machinery in the East Asian countries with Confucian cultural
legacy, where strong bureaucratic traditions had existed for centuries. This has
prompted many commentators to treat the high administrative capabilities observed
across the East Asian countries as a product of some deep-rooted cultural tradition.
This interpretation, in turn, has often resulted in undue pessimism about the possibil-
ity of improving the quality of administrative capabilities in other developing coun-
tries, many of which do not have a strong bureaucratic tradition.
However, while this cultural interpretation contains a certain germ of truth,
the alleged link between the Confucian bureaucratic tradition and the effectiveness of
modern administration turns out to be rather tenuous upon closer look.
Firstly, it is not clear whether it is only the Confucian countries that have a
strong bureaucratic tradition. For example, the South Asian countries can equally
boast many centuries of well-developed bureaucratic traditionat least dating from
the Moghul Empire and later modernized by the British. There has to be something
more than strong bureaucratic tradition if a country is to possess good administrative
capabilities.
Secondly, it is not clear whether it is the Confucian tradition that gave the East
Asian countries their high administrative capabilities. In Singapore and Hong Kong,
China it may well have been the transplanted British bureaucratic tradition, rather
than the Confucian bureaucratic tradition, which has formed the backbone of their
current administrative structures. For example, the Singaporean practice of keeping
government salaries competitive with those in the private sector is very much against
the old Confucian idea that the government bureaucrats should live a life of clean
poverty.
Thirdly, it should be noted that, even in countries with unadulterated Confucian
bureaucratic tradition, the tradition did not survive the political and economic turmoil
of the late 19th century and the early 20th century very well. For example, Korea and
Taipei,China, despite their long Confucian bureaucratic tradition, had rather unim-
pressive bureaucracies until the late 1960s (see Cheng et al. 1998 for further
details). For example, the bureaucracy in Taipei,China in the 1950s was still regarded
as lacking in meritocracy and effectivenessnot a very surprising state of affairs
considering the infamous corruption and incompetence of the same machinery in
mainland Peoples Republic of China before 1949. For another example, even in the
late 1960s, Korea was sending its bureaucrats to Pakistan and the Philippines for
training in administrative skills. It was only when they started a serious reform of the
bureaucracy in the mid-1960s that Korea and Taipei,China started establishing their
now-famous administrative capabilities.
The above examples give us grounds for being both pessimistic and optimistic.
The pessimistic side of the story is that administrative capability is something that
can easily decay, if it is not continuously tended to. The examples of Korea and
Taipei,China that we saw above do not need repeating, but Pakistan and the
Philippines, which were considered to have good bureaucratic capabilities by devel-
oping country standards during the early postwar years (so much so that Korea was
sending them its bureaucrats for training), also show how easy it is to squander
bureaucratic capabilities. The optimistic message, however, is that administrative ca-
pabilities can be, and indeed have been, as in the case of Korea and Taipei,China,
accumulated pretty quickly. In other words, various Asian experiences suggest that
although it is easy to destroy, a good bureaucracy is not as difficult to construct as it
is often made out to be.
The Role of the Technocratic Elite
The role of the state in the developmental process does not stop at general ad-
ministration, which provides the foundational inputs into the process of economic
development, such as basic information, stable state revenue, and law and order. The
state has to perform certain entrepreneurial roles if it is to promote changes in
technology and institutions, and thus promote economic development (Chang and
Rowthorn 1995).
What we call entrepreneurial activities do not necessarily mean the govern-
ment bureaucracy running productive enterprises, although we can certainly find
examples of successful state-owned enterprises (henceforth SOEs) from all over the
region, especially countries like Korea; Singapore; and Taipei,China (see pages 78 to
80 for the role of the SOEs in Asian development). What we mean by this is that the
state needs to provide an entrepreneurial vision for the new economy that it wishes
to forge out of the developmental process and to encourage investments in those ac-
tivities that will help it realize that vision.
Provision of such entrepreneurial vision, contrary to the popular belief, need
not involve huge subsidies or heavy protection, although some such incentives can be
sometimes useful. What is more important in this connection is the provision of fo-
cal points for private sector investment decisions through continuous policy dia-
logue with the private sector and through encouragement of cooperation among
private sector firms. The best example is the encouragement of information technol-
ogy industries by the Japanese government since the early 1970s (for more details,
see Renshaw 1986, Okimoto 1989, Fransman 1990). The Japanese government
attracted the private sector decisionmakers to a single vision through a series of
White Papers envisioning the information age and encouraged their cooperation by
supporting the formation of consortia for technological development (this involved
only a very limited amount of public sector money).
The experiences of the East Asian countries, where governments had notable
successes in playing the entrepreneurial role, show that such role is most success-
fully played when it is concentrated in, although not confined to, a small number of
pilot agencies led by a highly competent technocratic elite. However, it should be
strongly emphasized that, when we say this elite needs to be highly competent, we do
not mean that they need advanced training in economics, management, or some such
technical subjects. Telling from the experiences of the successful East Asian coun-
tries, the competence that is needed is that of a generalist, rather than that of a spe-
cialist, partly because there is substantial scope for on-the-job learning but also
because what is needed more is the ability to make sensible judgments on the basis of
given information, and not the detailed knowledge of the particular issue at hand.
Most of the elite economic bureaucrats in Japan have been lawyers by training.
Korea also had a high proportion of lawyers running the economic bureaucracy, and
in Taipei,China the elite economic bureaucrats were mostly engineers by training. In
contrast, the elite economic bureaucracy in India, a country with arguably one of the
best economics training systems in the world, has not been equally successful in
guiding its economy into success. The contrast between the simplistic nature of the
early Korean five-year plan documents (which employ little more than simple macro-
economic accounting and projection) and the sophistication of the Indian five-year
plan documents (which were based on the famous Mahalanobis model) provides a
graphic illustration of the point that the quality of training in economics is not what
mainly determines the quality of an economic bureaucracy.
Another lesson from the Asian experience regarding the role of the technocratic
elite is that this elite need to have a substantial degree of political insulation, which
will enable them to retain a degree of autonomy that is essential in long-range
planningalthough it must be made clear that such insulation has its downside (see
next section for a further discussion on this point). Such political insulation has been
ensured in a number of ways in the Asian countries.
In some countries, it was provided at the systemic level by a political system
where the executive branch of the government was dominantthe best examples
being Japan; Korea; and Taipei,China, although in the latter two such dominance was
based on a highly authoritarian political regime until recently. However, this is just
one, if a very important, way of insulating the elite bureaucracy from political pres-
sures. Another important mechanism used, not just in the authoritarian East Asian
countries but also in democratic India, was to establish a high-prestige career bu-
reaucracy, where political appointments were checked through a competitive re-
cruitment system and thus politically motivated hiring and dismissal was made
difficult; in contrast, the prevalence of political appointments has long been a prob-
lem in the Philippines (Campos and Root 1996, World Bank 1997).
The political insulation of the pilot agencies led by elite technocrats may have
been increased in some countries by the fact that they were cross-cutting agencies
and not line ministries and therefore they did not have to worry about client
interestsas it was the case in the (now-abolished) Economic Planning Board of
Korea or the Industrial Development Board of Taipei,China. However, the success of
the Japanese Ministry of International Trade and Industry, a line ministry, shows that
this need not be the case. Indeed, some may even argue that the tendency of such pi-
lot agencies becoming all too powerful, which can sometimes lead to an unchecked
pursuit of mistaken policy, can be usefully restrained by the presence of other power-
ful ministries, such as the Ministry of Finance in the Japanese case.
6
Publicprivate Interface: Embedded Autonomy
In the preceding section, we pointed out that political insulation of the state bu-
reaucracy has its downside. The most serious of this may be the fact that a politically
insulated state agency can pursue its aims without external checks. Especially since
the rise of neoliberal political economy (see Chang 1994, chs. 1-2 for a critical
review of neoliberal political economy), there has been a widespread tendency to
belittle politics as a corrupting and irrational influence on the government decision-
making process. Hence the call by the neoliberal commentators for a thorough de-
politicization of economic policymaking. Nevertheless, politics, however imperfect,
is one of the main channels through which the mistakes of the state bureaucracy can
be detected and corrected. In other words, a bureaucracy, and more generally a state,
which is overly insulated from political pressures runs the risk of becoming a power
unto itself and pursuing its own objectives, rather than serving as an institution
through which the society can coordinate potentially conflicting interests.
On the question of political insulation of the state, the experience of the East
Asian countries has generated a fertile debate. What especially drew peoples atten-
tion is that the bureaucracies of countries like Japan; Korea; and Taipei,China have
been quite attentive to the demands of the private sector, while not becoming subser-
vient to the private sector interests. How did these countries succeed in striking this
difficult balance?
A number of observers have noted that the political and the bureaucratic elite in
the East Asian countries have been constantly engaged in a dialogue with the private
sector, albeit through different mechanisms depending on the country. This continu-
ous dialogue, it was argued, ensured a constant feedback on government policies
from those who were affected by them.
For this purpose, Japan used the now-famous deliberation councils, which had
representations from both public and private sectors, as well as third parties such as
6
In contrast, in Korea, the Economic Planning Board controlled even the spending decisions, although the
revenues were still collected by the Ministry of Finance.
the academics, the press, and occasionally other social actors such as consumer
groups (World Bank 1993, ch. 4). Korea used similar institutions, including its own
unique monthly export promotion meetings presided by the president and attended by
top bureaucrats and top business leaders, which were used particularly actively in the
1970s, although the decision-making process in the Korean institutions were much
more government-dominated than in their Japanese counterparts.
Taipei,China had to use more informal and fragmented networks, because the
antagonism between the mainland political elite and the Taiwanese private sector
dictated that the emergence of large-scale private sector firms, which were the main
counterparts to the governments in the deliberation councils in Japan and Korea, was
actively discouraged (Fields 1995). In many Southeast Asian countries where the
ethnic divide between the political elite and the business elite was even deeper,
forging an institutional framework for a systematic and close governmentprivate
sector interaction was much more difficult, and such framework proved problematic
even in those instances when it was forged. However, we still need to note that the
Southeast Asian governments have made important efforts in this regard with some
successthe Joint Public and Private Sector Consultation Committee in
Thailand (Jomo and Rock 1998, 18-9) and the governmentprivate sector policy
networks that developed in some Indonesian industries, most notably in the automo-
bile industry (Jomo and Rock 1998, 29).
The above-described relationship between the state and the private sector in
certain East Asian countries (notably Japan and Korea) has been captured in the no-
tion of embedded autonomy (the term is due to Evans 1995). The proponents of the
notion of embedded autonomy argue that without its embedding in a dense network
of publicprivate interface, an autonomous state can easily degenerate into a power
unto itself (the Indian state is a partial example); while without a certain
degree of autonomy through political insulation, the state that tries to work with the
private sector may be easily captured by interest groups that dominate the network of
public-private interface (Pakistan and the Philippines in certain periods are examples
of this). The East Asian countries seem to have struck this difficult balance rather
well until recently, when the growing power of the private sector tilted the balance
toward embeddedness (pages 82 to 85 provide some more detailed discussions on
the recent crisis).
Institutions of Learning and Innovation
In order to maintain a sustained growth in any country, an ability to increasingly
incorporate more advanced technologies into the production process is necessary.
The popular notion is that this means the ability to generate innovation, but for de-
veloping countries, the mastery of imported advanced technologies (a process that is
now frequently called learning) is often more important than the generation of
genuinely new technologies through innovation (Fransman 1986).
In this section, we wish to discuss the institutions that matter for the process of
learning and innovation. Once again, the popular view is that this exclusively con-
cerns the knowledge-generating institutions in the narrow sense, namely, the educa-
tional system, public research institutes, and corporate R&D laboratories. In this
section, however, for reasons that will become clearer later in the discussion, we not
only adopt a broader definition of knowledge-generating institutions to include the
factory shopfloor but also adopt a broader definition of the institutions of learning
and innovation to include things like property rights, institutions for human resource
development, financial institutions, and rules of competition (a similar but different
classification is offered by Lundvall 1992).
Knowledge-generating Institutions
In the most conventional view of the innovation process, known as the linear
model of innovation, it is assumed that the process starts with the discovery of some
new scientific knowledge, which then gets translated into a new technological
ideainventionand gets ultimately commercialized into a new product or a new
production processinnovation (for a good review and critique of this model, see
Coombs et al. 1987, ch. 5). Seen in this way, the most important knowledge-
generating institutions include government (and other public) research institutes, uni-
versities, and corporate research laboratories.
There is no dispute that these are institutions that are critical for the develop-
ment of an economys learning and innovation capabilities. The effectiveness of
these institutions will affect the economys long-term innovative potential, and thus
its standard of living in the long run. However, this should not lead us to the policy
conclusion that all that the government has to do in order to generate more new
knowledge in the economy is to subsidize the activities by the specialized R&D in-
stitutions to the socially efficient level in order to close the gaps that exist between
the private costs and benefits of R&D activities and their public costs and benefits.
Recent works in the economics of technology suggest that there is a lot more than
subsidizing R&D to the promotion of knowledge generation (major works include
Dosi et al. 1988, Lundvall 1992, Nelson 1993).
Firstly, new technological knowledge is generated not just in the high-brow
R&D or educational institutions. Recent studies of East Asian corporate success,
especially the Japanese success, have convincingly demonstrated that the incremental
innovation that happens on the factory shopfloor plays a critical role in determining a
firms ability to generate new knowledge (Best 1990, ch. 5, provides the best over-
view; Dore 1984 and 1987 also provide some penetrating analyses). The exceptional
degree of delegation of decision-making power to the shopfloor (to the work teams
and even to individual workers) in Japanese firms, and to a lesser extent Korean
firms, has enabled them to tap sources of knowledge (namely, the production
workers and the low-level engineers) that have not been exploited by firms in other
countries, which tend to delegate very little decision-making power to the shopfloor.
Focusing on the high-brow R&D institutions, thus seen, may lead us to ignore an
important source of innovation, namely, the shopfloor.
Secondly, it has also been pointed out that the closer interaction between the
R&D, manufacturing, and marketing departments in Japanese and other East Asian
corporations during the innovation process gives them a competitive edge by short-
ening the time needed for product development (this aspect has been emphasized by,
among others, Dertouzos et al. 1989). Greater interaction between different func-
tional departments, it has been argued, allows the East Asian corporations to reduce
the risk that the R&D departments will come up with ideas that are theoretically good
but have problems in terms of manufacturability or marketability, which will then re-
quire them to go back to the drawing board, thereby delaying the product
development process. The conclusion is that, when we try to improve the perform-
ances of the corporate R&D departments, not only their funding and internal organi-
zation but also their relationships with other functional departments need to be
looked at.
Thirdly, it is all too well to say that the government (and other public sector
agents) should be involved in the knowledge-generating process because the private
sector is likely to undersupply knowledge (as it is a public good), but this still leaves
us with the question of deciding on the exact mix of public and private involvements
in the R&D process. The East Asian experiences provide an interesting lesson here,
namely, that the mix between the private and the public in R&D activities is not
simply determined by the technological and the financial requirements of the innova-
tion process but by institutional factors as well. For example, the government of
Taipei,China is much more heavily involved in funding R&D than the government of
Korea: as of the mid-1990s, the former provide roughly half of total R&D, whereas
the Korean government provides only about 15 percent.
7
This contrast is in some
ways counterintuitive, when considering that the Taipei,China government has been
generally less interventionist than its Korean counterpart until the 1990s liberaliza-
tion in Korea. This difference has to be explained by the fact that there are relatively
few large private sector firms in Taipei,China that have the organizational as well as
financial ability to conduct their own R&D.
Fourthly, the effectiveness of the knowledge-generating institutions, especially
the government R&D units and the universities, will depend on the link between
7
As of 1995, Korea had the worlds highest ratio of private-sector-financed R&D as a proportion of GDP (2.27
percent), which was 84 percent of total R&D (total R&D in Korea in 1995 was equivalent to 2.7 percent of GDP).
The corresponding figure for Taipei,China in 1994 was 1 percent, which was barely over half of total R&D
(Taipei,Chinas total R&D in 1994 was equivalent to 1.8 percent of GDP). The figures are from Lall (1998, table 7).
them and the rest of the economy. The recent literature on national system of inno-
vation has emphasized that the nature of the link between the nonindustry R&D
institutions and the firms critically affects the speed and the degree of the diffusion of
new technological knowledge in the economy (see essays in Lundvall 1992 and
Nelson 1993). The Asian examples confirm this general observation. For example, in
India, the relatively distant relationship between the public and academic research
institutes, on one hand, and the corporate sector on the other, has been a major obs-
tacle to the utilization of high-quality (sometimes even world-class) knowledge
generated by these institutions, while in Korea the relatively close relationship
between the two enabled the firms to make the maximum use of the new knowledge
generated by these institutions. In other words, without an effective mechanism to
ensure that the specialized knowledge-generating institutions are in close touch with
the corporate sector, the knowledge they generate may not be effectively utilized by
its potential users.
To summarize, an economys ability to generate new knowledge is not simply
determined by the characteristics of its specialized R&D or educational institutions,
as it is often uncritically assumed. Recent theoretical advances in the economics of
technology and the experience of various Asian countries suggest that we need to
look beyond the specialized knowledge-generating institutions, if we are to properly
understand the process of knowledge generation. For this, we need to look at things
such as: (i) the organization of activities within business firms (e.g., how much deci-
sion-making power is delegated to the shopfloor, how the different functional de-
partments are coordinated in R&D efforts); (ii) the institutional structure of the
corporate sector (e.g., prevalence of small firms necessitate more government in-
volvement in R&D); (iii) and the relationship between the specialized knowledge-
generating institutions and the productive enterprises (e.g., how closely the corporate
sector works with specialized knowledge-generating institutions).
Property Rights
There is no question that property rights, including intellectual property rights,
are important in determining the incentive to generate and absorb new knowledge.
The key policy dilemma here stems from the fact that knowledge has a public good
character, which means that those who did not contribute to its generation can also
benefit from it, once it is generated. This makes it important that the government, as
the ultimate guarantor of property rights, establishes the property rights institutions in
a way that can ensure that those who generate new knowledge get to appropriate at
least a substantial part of the gains from it, as otherwise the incentive to generate new
knowledge will be significantly diminished.
In this regard, many people, especially those who have been influenced by the
property rights school (Barzel 1989 is a representative work in this tradition), have
emphasized the lack of clear and secure property rights, especially over business en-
terprises, as an obstacle to development in many developing countries. It is
frequently argued by these people that, without secure property rights over produc-
tive enterprises that protect their owners from the risk of appropriation (either by the
state or by other private sector actors), there will be no incentive on the part of the
owners to invest in the generation of new knowledge, as they will not be able to ap-
propriate all the appropriable gains from the new knowledge (that is, apart from the
inevitable leakage due to the public good nature of such knowledge).
The statement that clear and secure property rights are important in providing
the incentive to learn and innovate has been unfortunately interpreted as meaning that
highly codified private ownership rights are what are needed. However, clear and se-
cure property rights can take many forms. Public and communal property rights,
which are rarely well-codified, can be as secure and clear as any private property
right. Moreover, property rights do not always exist in pure forms but are often
truncated in the sense that public concerns get (legitimately) imposed on how pri-
vate property rights are exercisedthrough numerous regulations regarding, among
other things, industrial standards, product safety, public decency, urban zoning, pol-
lution, and so on (see Rowthorn and Chang 1993 for further details).
It is true that in some Asian countries (such as India, Bangladesh, and
Indonesia) poor state-owned enterprise (SOE) performances have been a major
problem. However, other countries in the region show some important counter-
examples to the conventional wisdom that private ownership is essential for enter-
prise efficiency and especially technological dynamism.
8
Taipei,China has one of the largest public enterprise sectors in the nonoil-
producing world but has shown exceptional technological dynamism (Amsden 1985,
Fields 1998).
9
The government of Taipei,China has also successfully spun off a
number of high-technology firms in the semiconductor industry from its electronics
research institute. Koreas state-owned steelmaker Pohang Steel Company is famous
for being one of the most efficient and technologically advanced producers in the
world (Amsden 1989). The SOEs have also played an important role in the
Singaporean economy, especially in sectors like shipbuilding, steel, and various high-
technology industries.
8
The earlier orthodox position on the role of state-owned enterprises in developing countries is well summa-
rized in World Bank (1983). Subsequent criticisms (reviewed in Cook and Kirkpatrick 1988, and Chang and Singh
1993) forced the World Bank and its associates to revise its position (World Bank 1995), but even this revised posi-
tion has a lot of problems (for a critical review, see Chang and Singh 1997).
9
If we add the enterprises owned by the ruling party, Kuomintang, which are technically classified as private
sector firms but whose nature is very ambiguous, the size of the SOE sector in Taipei,China will be even bigger. Even
as of the late 1990s, when the dominance of its SOE sector was significantly weakened, the three largest firms in the
country are SOEs, while seven of the 10 largest firms (including the three largest) are SOEs. See Fields (1998) for
further details.
The recent experience in the Peoples Republic of China (PRC) also provides
some interesting insights into the issue of property rights in economic and techno-
logical development. It has shown that formally unclear property rights do not
necessarily mean they are unclear in practice as well. The emergence of a wide range
of hybrid forms of enterprise ownership in the PRC, where the formal ownership is
often very unclearly distributed between many agents (e.g., the state, the armed
forces, local governments, cooperatives, individuals), did not prevent the country
from rapidly absorbing new technological knowledge, because the property rights
were often very clear de facto (Nolan 1996).
Institutions for Human Resource Development
In the long run, an economys ability to generate productivity growth through
learning and innovation cannot be sustained without an adequate amount and quality
of human resources. Indeed, few will dispute that the economic successes of the East
Asian countries owed a lot to their ability to very quickly raise the quality of their
labor force at all levels. However, apart from the rather general point that developing
countries need to have better educational institutions, the lessons from the East Asian
experiences regarding the building of institutions for human resource development
(and the South and the Southeast Asian experiences as contrasts to them) do not
seem to have been fully drawn.
The first lesson from the East Asian experience in human resource development
is that institutions of human resource development need to be interpreted as some-
thing much broader than the formal educational system. For one thing, the success of
countries like Korea in raising the literacy ratio in a short time (from 22 percent in
1945 to 71 percent in 1961) highlights the importance of informal educational insti-
tutions such as adult literacy programs. But more importantly, the industrial success
of the East Asian economies demonstrates the importance of training in enhancing an
economys ability to learn and innovate.
As recent studies on national systems of innovation have pointed out, schools
form only one (albeit important) part of the learning system. They also show that, for
industrial development, training institutions and other extramural learning institutions
may be equally, if not more, important as schools are. The training system in this
context should not be narrowly defined in terms of independent (public and private)
training institutions, but should be understood more broadly as also comprising
on-the-job training programs and even the very organization of work (which affects
the extent of on-the-job acquisition of skills by the workers). The East Asian coun-
tries provide some interesting examples here.
The first example is the organization of work in the Japanese, and to a lesser
extent Korean, firms. As we pointed out earlier, these firms typically delegate a lot of
decision-making power to the shopfloor. This not only enabled these firms to tap new
sources of knowledge generation, it also maximized the learning potential of the
shopfloor jobs held by ordinary workers.
The second example involves the direct provision and the encouragement of
industrial training by the Korean government. The Korean government not only set
up public training institutions but also encouraged on-the-job training at the firm
level. In the 1970s, on-the-job training was even made compulsory for firms above a
certain size, although later many firms opted out of this by paying public training
levies rather than providing the training themselves (for further details, see You and
Chang 1993).
The third example involves various schemes that the Singaporean government
introduced during the 1980s in order to retrain the existing workers and raise the
quality of the economys human resource stock. Examples include Basic Education
for Skill Training, Worker Improvement through Secondary Education, and Core
Skills for Effectiveness and Change (for further details, see Ashton and Green 1996).
The second lesson from the Asian experience in relation to human resource de-
velopment is the importance of science and technology education within the formal
educational system.
The East Asian countries all have put emphasis on science and mathematics
education from the primary school level onward with impressive results. In a recent
international test of mathematics and science involving half a million 13-year-olds
from 41 countries, Singapore ranked 1
st
in both subjects, while Korea came 2
nd
in
mathematics and 4
th
in science. Japan came in 3
rd
in both subjects, and Hong Kong,
China ranked 4
th
in mathematics (although it ranked only 24
th
in science) (Lall 1998,
38). As of the mid-1990s, Korea and Taipei,China respectively occupied 1
st
and 2
nd
places in the world in terms of per capita enrollment in core technical subjects of
science, mathematics, computing, and engineering at the tertiary level; 1.55 percent
and 1.09 percent of their population, respectively, were enrolled in these subjects
(Lall 1998, table 6).
In contrast, the weakness of the Southeast and the South Asian economies in
these areas is one reason why their abilities to learn and innovate have been relatively
weak. For example, Thailand, the only Southeast Asian country included in the
abovementioned test for 13-year-olds, ranked only middle (Lall 1998, 38). In terms
of the number of tertiary enrollments in core technical subjects as a share of total
population, the South Asian countries (except Sri Lanka, which is by far the richest
in the region) were in fact not doing too badly, given their levels of income. Pakistan
(0.06 percent), Bangladesh (0.08 percent), and India (0.12 percent) all did considera-
bly better than countries at comparable levels of income (Uganda, 0.01 percent;
Ghana, 0.01 percent; Kenya, 0.02 percent; and Nigeria, 0.04 percent). Sri Lanka at
0.07 percent was in contrast not only the worst performer in the region, but also
considerably behind other developing countries at similar levels of income (Egypt,
0.12 percent; PRC, 0.13 percent; Indonesia, 0.13 percent; Morocco, 0.28 percent;
and Philippines, 0.33 percent). In Southeast Asia, the Philippines was doing the best,
given its level of income. Thailand at 0.32 percent (compared to Tunisias 0.24 per-
cent, Turkeys 0.35 percent, Colombias 0.38 percent, and Mexicos 0.45 percent)
and Indonesia (see above) were on the weaker side. The most worrisome among the
Southeast Asian countries is Malaysia, which, at 0.14 percent, was doing much
worse than countries with similar levels of incomeeven worse than South Africa
(0.23 percent) and Brazil (0.19 percent), which are both not particularly good per-
formers, not to mention Mexico (0.45 percent) and Chile (0.67 percent) (Lall 1998,
table 6).
The third lesson from the Asian experience regarding human resource devel-
opment is that human resources that are important for an economys ability to learn
and innovate are not just the highly qualified scientific manpower but the workforce
as a whole. It was not just the university graduates in science and technology, but the
well-trained skilled workers and the general workforce with good literacy and
numeracy that enabled the East Asian countries to effectively absorb advanced tech-
nology and come up with new ideas.
Indeed, it may even be argued that, for countries that are not at the frontier of
technological development, the latter is much more important than the former. For
example, countries like India, and to a lesser extent the PRC, have shown that, even
if a country has world-class human resources at the highest level in certain important
areas (e.g., aerospace, nuclear physics, computer software development), without a
well-educated and well-trained workforce at all levels, an economys ability to learn
and innovate can remain poor.
In this regard, the provision of vocational training at and beyond the secondary
school level in certain East Asian countries may have been important in raising their
capabilities to learn and innovate. Minimum compulsory technical education in sec-
ondary schools, as in the case of Korea, seems to have raised the general awareness
of school-leavers of the basic issues in modern production techniques, albeit at a very
superficial level. More importantly, the model of vocational secondary schools first
invented by the Germans in the 19th century, and quite successfully adopted by
countries such as Japan and Korea subsequently, is regarded by many researchers to
have enabled these countries to accelerate their technological progress by providing a
technically competent workforce. The South and Southeast Asian countries in the
region with more Anglo-American traditions in education seem to have suffered from
the weakness of their vocational schooling.
Financial Institutions
Financial institutions are critical for mobilizing and allocating resources needed
for productivity growth in general but especially for innovation, which often involves
large-scale investments and a long gestation period, which make financing through
retained profits difficult. What was the role of financial institutions in Asian eco-
nomic development?
The standard interpretation is that the Asian financial institutions did not con-
tribute to development very much. It is argued that most Asian governments (except
Hong Kong, China) typically have engaged in financial repression, which artifi-
cially represses interest rates and rations credits according to nonmarket criteria (such
as selective industrial policy or political patronage) and prevented the development
of financial institutions, especially the stock market but also the banks. At the same
time, it has been argued that the underdevelopment of the stock market in these
countries has resulted in the absence of an effective takeover mechanism, which
makes enterprise restructuring difficult and inefficient.
Before we discuss how well their financial institutions served various Asian
countries, two things need to be clarified.
One, we need to remember that there is no such thing as the Asian financial
system. It is true that most Asian countries (with the exception of Hong Kong, China;
Singapore; and Malaysia) have a bank-based financial system, rather than a capital-
market-based system, but there is a significant variation across countries. For exam-
ple, in some Asian countries, government ownership and/or direction of banks have
been prominentPRC, India, and Pakistan are obvious examples, but the state has
owned (at least part of) and strongly directed the banking sector in Korea and
Taipei,China until recently. (In Korea, all banks were state-owned between 1961 and
the early 1980s and were heavily state-directed until the 1993 financial liberaliza-
tion), while in Taipei,China, the bulk of the banking sector is still state-owned. At the
other extreme is Thailand, where the large, privately owned banks were powers in
their own right and even regarded by some to have had disproportionate influence on
the government policymaking process. In between is perhaps Japan, where the state
did not own more than a few development banks, but it directed bank lending deci-
sions to an important extent.
Two, we need to debunk the popular myth that the bank-based financial system
that has dominated Asia is somehow a deviation from the norm of the capital-
market-based financial system. The reality is, in fact, the reverse. As is well known,
bank dominance of the financial system is the norm among developing countries in
general, and not just in Asia, but this is also the case among the developed countries.
It is only the US, the UK, and a few other Anglo-Saxon countries that have capital-
market-based financial systems, and all the other developed countries have bank-
based systems of one type or another (see Zysman 1983, Cox 1986).
What have been the performances of these different financial institutions across
Asia? A currently popular argument is that the Asian financial institutions
especially the East Asian varietyare inefficient because the profitability of their
banks and other financial firms is low. However, this assumes that private profitabil-
ity correctly reflects a firms social contributiona highly questionable assumption
(see Chang and Singh 1993 for a more detailed argument).
The present paper believes that the best indicator of an economys financial in-
stitutions efficiency is its growth performance in the long run, rather than the prof-
itabilities of the banks and other financial institutions themselves, which do not
necessarily reflect their true social contributions. And from this point of view,
given their excellent growth records during the last three decades or more (depending
on the country), we may be able to say that the financial institutions in many East and
Southeast Asian countries have performed very well.
10
Indeed, the ability of the fi-
nancial systems in many East Asian countries to generate patient capital that are
absolutely necessary for long-term-oriented activities like learning and innovation is
exactly what many commentators have argued to be the strength of these countries.
Thus seen, the currently popular argument that the financial crises in some East
and Southeast Asian countries prove the fundamental flaws in their financial institu-
tions (as well as those in other institutions, especially those concerning the labor
market and corporate governance) is highly problematic. Doubtlessly, the Asian fi-
nancial institutions have their shortcomings, but the plain truth is that the financial
institutions in the East and the Southeast Asian countries have enabled these coun-
tries to channel financial resources into learning and innovation rather effectively
during the last few decades. Moreover, as many observers now agree, the current cri-
sis is largely a product of financial liberalization that occurred in the East and the
Southeast Asian countries since the late 1980s, and especially the early 1990s, which
encouraged the accumulation of short-term foreign debts and weakened the already
weak prudential regulations that existed in these countries.
11
It is no coincidence that
three countries in the region that have not extensively liberalized their state-directed
bank-based financial system, namely, PRC; India; and Taipei,China have survived
the crisis the best.
With the qualification that there really is no such thing as the Asian financial
system, we can state that the financial institutions in the Asian countries were mostly
bank-based. Contrary to the currently popular perception, while there were certain
problems with the financial institutions in various Asian countries, these institutions
in general did not need a radical overhaul, given their proven ability to channel re-
sources into learning, innovation, and growth. It was in fact the weakening of their
10
However, it should be noted that for several years leading up to the recent crises, growth rates of some East
and Southeast Asian countries have been somewhat inflated by the large-scale inflow of speculative foreign capital
and therefore they overstate the underlying strengths of these economies to an extent. I thank an anonymous referee
for raising this important point.
11
It is no big surprise that economists and other social scientists who have been sceptical of the orthodox view
see things this way (see the essays in the special section in the August issue of World Development 1998, and the
special issue of Cambridge Journal of Economics, November 1998). Now however, even some of the core members
of the orthodox group have converged on this view. See, for example, Radelet and Sachs (1998), Feldstein (1998),
and Stiglitz (1998), although the last is the least of a surprise.
traditional financial systems that facilitated the recent economic crises in some
East and Southeast Asian countries (for a more detailed discussion, see Chang
2000b).
Rules of Competition
Very few people would disagree that competition provides a critical impetus for
productivity growth in a capitalist economy. Consequently, many people would agree
that the rules of competition are one important factor affecting a countrys ability to
learn, innovate, and thereby increase productivity.
The dominant view of competition, namely the neoclassical view, is that the
more competition there is (as measured by the number of the firms in the same busi-
ness) the better. The policy implication, naturally, is that antitrust legislation that
restricts the exercise of market power by the firms should be the lynchpin in compe-
tition policy. However, the economically successful East Asian countries have oper-
ated under quite different rules of competition, thus raising some important questions
regarding the dominant view of competitionalthough there has been a marked shift
in the rules of competition in some East Asian countries during the last several years
into a more orthodox (neoclassical) direction.
First of all, the East Asian governments have deliberately created oligopolistic,
or even monopolistic, market structures, if scale economy was regarded as important
in the particular industry concerned.
12
They restricted entry into industries where
scale economy is important, through measures like licensing, credit control, and
informal pressures (administrative guidance)although there were conspicuous
exceptions such as the Taipei,Chinas passenger car industry where over 10 produc-
ers are producing several thousand cars each in an industry where the minimum
efficient scale of production is regarded to be around 300,000. Given the small size
of the domestic market, especially in Korea and Taipei,China, the governments also
pushed the producers into export markets, so that they could achieve scale economy
quickly, which brought an added benefit of putting more pressure on the producers to
master frontier technologies. Moreover, the entry restrictions were eased as the size
of the (domestic and export) markets grew, providing further competitive spur with-
out harming production efficiency. In contrast, entry restrictions based on scale
economy considerations that were practiced in other Asian countries such as India
did not produce similarly beneficial results, not because such restrictions were neces-
sarily wrong in themselves, but because they were not combined with an export strat-
egy and were not eased in step with market growth.
12
Many estimates of the allocative inefficiencies arising from noncompetitive (that is, monopolistic or oli-
gopolistic) markets suggest only modest figures (equivalent to 1-2 percent of total output), whereas the cost increase
that follows from adopting a suboptimal scale of production is known to result in tens (if not hundreds) of percentage
differences in production costs.
Second, the East Asian governments have been deeply concerned with exces-
sive, wasteful, or destructive competition, and took actions to prevent it. The
notion of excessive competition has often been dismissed as stemming from an
irrational fear of competition by ignorant bureaucrats, but it makes perfect sense
once we acknowledge the importance of physical and human assets dedicated to
particular uses in modern industries (or specific assets, according to Williamson
1985). Given the existence of specific assets, any failed project that follows an
excessive entry (compared to what is warranted by the demand condition) leads to
a waste of resources in the sense that the specific assets employed in the failed
project may not be transferred to other activities without significant losses in their
economic values (for a systematic discussion, see Chang 1994, ch. 3). Consequently,
the East Asian policymakers tried to coordinate investments ex ante in order to pre-
vent excess entry, but when excessive entry materialized for whatever reason (e.g.,
erroneous projection, sudden changes in world market conditions, some firms defy-
ing the government policy, etc.), it organized and encouraged (explicit and implicit)
recession cartels, negotiated capacity scrapping arrangements, or even forced merger
and market-sharing programs, to reduce the wastes from excessive competition.
13
Third, the East Asian governments have willingly suspended antitrust legisla-
tion if some collusive behaviors by the firms were thought to be necessary for raising
productivity in the industry concerned.
14
For example, in Korea, there existed no an-
titrust legislation until 1981, and even after that collusive behaviors was explicitly
allowed in promising industries that needed to increase R&D, improve quality,
and attain efficient production scale, and in declining industries that needed to
scale down their capacities (the quotes are from the 6th Five Year Plan ([1987-91])
document; for further details, see Chang 1993, 140). In Taipei,China where many
large firms were public enterprises (see earlier section on property rights), antitrust
policy had a different dynamic, but Taipei,China did not hesitate to promote mergers
if they were deemed necessary for exploiting scale economies (see Wade 1990,
186-7). Similar policies in some other Asian countries frequently ossified the cartels
and resulted in industrial stagnation, but the East Asian countries avoided such
danger to a large extent, because the suspension of competition was regarded as a
temporary measure to achieve relatively well-specified goals that are deemed neces-
sary for productivity enhancement (although it could sometimes last quite long), and
was terminated when the stated objective was achieved.
13
The emergence of excess capacity in a number of industries in Korea in the build-up to its recent crisis owed
a lot to the end of traditional investment coordination policy. See Chang (1998) and Chang et al. (1998) for further
details.
14
The German antitrust legislation, which has served as a model for the Japanese legislation since the latters
1953 amendment away from the Anglo-Saxon template imposed earlier by the American Occupation Authority, also
provides many escape clauses to cartel and other collusive behaviors, especially by small firms, when they are re-
lated to aims like rationalization, specialization (i.e., negotiated market segmentation), joint export activities, and
structural adjustments (Shin 1994, 343-55).
The lax antitrust policy regimes of some East Asian countries have often
been interpreted as the results of corrupt collusion between big business and the gov-
ernmentan interpretation that is becoming even more popular with the current cri-
sis in the region, which has been interpreted as a result of crony capitalism (for a
criticism of the crony capitalism argument, see Chang 2000b). Although there have
been certainly elements of such collusion present in these countries, it should be
pointed out that the rules of competition that they have had also owe their existence
to the nature of the view of competition that their policymakers had, where antitrust
issue was of secondary importance.
The view of competition that lay behind the East Asian competition policy re-
gimes can be roughly described as the continental view of competition, shared by
some unlikely bedfellows such as Karl Marx, Joseph Schumpeter, and Friedrich
Hayek. This view contrasts starkly with the dominant neoclassical view, which is ex-
clusively concerned with the question of preventing the exercise of market power by
the producers (see Hayek 1949 and McNulty 1968 for some classic discussions con-
trasting the neoclassical and the continental views of competition).
Those who are influenced by the continental view of competition are concerned
more with the influence of scale economy on productivity, the damages of exces-
sive competition, and the need to restrain competition for a limited time in order to
allow technology upgrading and/or smooth phaseout. These concerns have meant
that competition policies in the East Asian countries have been designed in such a
way that they are probably very inefficient from the neoclassical point of view, but
are quite effective in raising productivity and facilitating industrial restructuring.
Once we cast away the conventional wisdom that equates competition policy with
antitrust policy, the East Asian experience provides us with a lot of hitherto unrecog-
nized lessons on how to build an effective competition policy regime.
During the last decade or so, starting from the American pressure on the East
Asian economies to change their rules of competition (which in the American view
acted as unfair competitive weapons to the domestic firms) and culminating in the
recent multilateral discussions on the international harmonization of competition
policy regimes, the East Asian countries have been under enormous external pressure
to change their rules of competition (see essays in Berger and Dore 1996 for further
discussion). At the same time, there has been a growth in the domestic opinion in
these countries that the rules of competition that have prevailed in their economies
are creating inefficiencies and hampering productivity growth. The result has been a
significant change in the rules of competition in many East Asian countries, espe-
cially in countries like Korea, where the traditional rules of competition had been
largely abandoned by the mid-1990s. However, as we have argued in this section,
there are perfectly sensible justifications for the rules of competition that previously
prevailed in East Asia, and they should not be lightly discountedespecially when
considering that the departure from the old rules in countries like Korea has been one
main factor behind the build-up of the excess capacity that contributed to their cur-
rent economic crises (see Chang et al. 1998 for further details).
Institutions of Income Redistribution and Social Cohesion
At least during the last two decades, most Asian countries seem to have suf-
fered less from social conflicts than have many other developing countries. Some
people regard these outcomes as essentially a result of some historical luck enjoyed
by these countries, be it the traditionally more egalitarian income distribution or the
less conflict-oriented culture.
However, the truth is that social peace in Asia is in fact a relatively new thing.
In addition to those world-famous events like the Chinese Communist revolutions,
the Viet Nam War, and the Korean War between the 1950s and the 1970s, the region
witnessed wars, insurgencies, and riots of various scales mainly motivated by
distributional concerns (and often interwoven with racial conflicts) in almost all
countries: India; Indonesia; Malaysia; Philippines; Sri Lanka; Thailand; and even
Hong Kong, China and Singapore. It was only because of a range of measures to
redistribute income and generally increase social cohesion that the Asian countries
could hold their societies together better and maintain relative political peace better
than other developing countries have done during the last two to three decades.
The most important example of an institution to redistribute income that we can
find in Asia is obviously land reform. Japan; Korea; and Taipei,China all instituted
comprehensive land reform measures in the early postwar years, involving redistri-
bution of land, land ownership ceilings, and restrictions on the terms of tenancy.
Other countries in the region, for example, India and the Philippines, also instituted
some limited land reform measures, although with relatively little success. Govern-
ments of countries like Malaysia and Thailand provided support to the schemes for
opening up new lands in order to diffuse the pressure for land redistribution.
Labor movement was often brutally suppressed in many Asian countries, but
even those countries frequently made some efforts to incorporate working class inter-
ests in policymaking. Even countries like Korea and Singapore, which have been fa-
mous for harsh policy toward union movements, have co-opted some sections of the
union movements and provided some degree of protective measures for the ordinary
workers (e.g., cover for industrial accidents, legal priority for wage claims over other
claims in case of enterprise bankruptcy).
Countries like Hong Kong, China and Singapore also put emphasis on provid-
ing extensive public housing, thus easing the tension over the most contentious po-
litical issue in these city-states. Other countries also have run public housing
programs, but they were not as extensive and successful as those of Hong Kong and
Singapore. However, it needs to be pointed out that these measures were imple-
mented after a period of political unrest over the issuein Hong Kong, China there
were even housing-related riots in the early postwar years.
In the case of Malaysia, the income gap between the politically dominant
Malay community and the economically better off but politically weak Chinese
community was seen as the major threat to national cohesion. Following the infa-
mous race riot of the late 1960s, the Malaysian government implemented the New
Economic Policy program that included measures intended to reduce the economic
gap between the two communities. The measures included quota on entry into higher
education, quota on enterprise share ownership, and the establishment of a range of
public enterprises that kept certain industries from Chinese interests. Government
support for small-scale agriculture can also be interpreted as a measure of ethnic re-
distribution, given the predominance of the Malay community in the sector. While
there have been many problems with these measures of ethnic redistribution, it will
be hard to deny that without these measures the Malaysian society is likely to have
experienced more political unrest.
Among regulatory measures that are regarded by some outsiders as unfair,
hidden trade protection measures were, at least in their inception, mainly motivated
by concerns for income distribution and social cohesion. Protection of the handicraft
sectors in India is one example. For another more internationally controversial exam-
ple, we can cite the protection of small farmers and small shopowners in Japan and
Korea, who were neither qualified enough to get a job in the modern manufacturing
sector nor entitled to much social protection measures due to the poorly developed
welfare state (for further arguments see Chang 1996).
The governments of some East Asian countriesnotably Japan and Korea, but
also Taipei,Chinaput severe restrictions on luxury consumption in their earlier
phases of development, not only because they thought luxury consumption will
reduce overall savings and the foreign exchanges available for importing capital
goods, but also because they regarded conspicuous luxury consumption as damaging
for social cohesion through its demonstration effect (see Chang 1997a).
The abovementioned institutions of income redistribution and social cohesion
in various Asian countries have come under increasing strain recently due to chang-
ing national and international circumstances. Some measures, such as the protection
of the small retailers, are regarded as covert protectionist measures that are unaccept-
able in the new era of globalization. Some other measures, for example, ceilings on
the ownership of farmland, are internally criticized for raising agricultural production
costs. Still some other measures, such as ethnic quotas, are attacked from both inside
and outside as inefficient and unfair.
Most of these criticisms have a point, but they tend to miss the bigger picture.
What the Asian countries have been buying with these sometimes (but not always)
inefficient and sometimes unfair institutions are social cohesion and political peace,
which have been the foundation of their prosperity. It may be possible to increase the
efficiency of the Asian economies by abolishing many of the abovementioned
institutions of income redistribution and social cohesion, but in the longer run, this
will increase social tension and political unrest, and may ultimately damage their
prosperity by shaking investor confidence.
This is, of course, not to say that it is impossible to improve the cost effective-
ness and the fairness in the provision of social cohesion and political peace in the
Asian countries. On the contrary, there is still a long way to go before these countries
can claim to have established genuinely inclusive and cohesive societies. However,
we should not lose sight of the bigger picture that the apparent peace and harmony
that exist in many Asian countries are just a thin surface that can be easily scratched
away, and that social cohesion and political peace in these countries had to be
bought, sometimes at considerable costs.
Conclusion: General Lessons and Lessons for Asia
What are the lessons that we can draw from our theoretical discussion and the
empirical surveys of the various Asian experiences?
Firstly, our review of the Asian experiences shows that a range of institutions,
and not just the market and the state, have played extremely important roles in the
development of various Asian countries. Indeed, this is also one of the points that we
raised in our theoretical discussion. The market and the state are themselves institu-
tions, which, in turn, need to be supported by certain other institutions if they are to
function well. In this sense, the existing debate on the relative merits of the market
and the state has been misguiding policymakers, as without the construction of the
institutional bases for their effective functioning, expanding the role of the market or
the state would not produce the expected results.
Secondly, our discussion shows that, while there are certain similarities in the
institutional characteristics across countries at least within the subregional groupings
(e.g., East Asia, Southeast Asia, South Asia), there has been an impressive range of
diversity in the institutional arrangements in various Asian countries, even in the case
of countries from the same groupings. Even apparently similar institutions have
performed very differently in different countries, depending on the other institutions
that interact with them. For example, the bank-based financial system performed well
in certain Asian countries but not in others, possibly because of the differences in in-
stitutions regulating industrial competition, among other things. This observation, at
the more theoretical level, suggests that institutions need to be analyzed from a sys-
temic perspective that takes into account the interactions between different
institutions.
Thirdly, while there is no single ideal institutional arrangement, this does not
necessarily mean that every country, given its own unique history and social struc-
ture, should find its own unique institutional solution to every problem. The advan-
tage of being a latecomer lies not only in being able to borrow technologies but
also about being able to borrow institutions. Various Asian experiences, especially
the East Asian experiences, indeed show that there is a considerable scope for im-
porting and adapting foreign institutions to local conditionsMeiji, Japan importing
a whole array of Western institutions and adapting them to local needs (Westney
1987 is an excellent study of this experience); Korea imitating Japanese institutions
on R&D, human resource development, and rules of competition (Chang 1993); and
Thailand importing deliberation councils from Korea and Japan (Campos and Root
1996, ch. 4), and so on. Thus, while we need to maintain due scepticism about its
fit with the existing local institutions when importing an institution, we should also
avoid undue pessimism about the scope of institutional learning and adaptation.
Finally, our discussion shows that it is wrong to argue that many institutions in
various Asian countries are deviant and pathological ones that have created inef-
ficiencies and even have brought about the current crisis. On the contrary, the Asian
institutions are frequently closer to the norm than the Anglo-American institutions
that are supposed to be the ideal to emulate (e.g., the bank-based financial system
is much more widespread than the Anglo-American capital-market-based system).
Moreover, while far from being ideal, these supposedly pathological institutions have
contributed a lot to creating economic dynamism and social cohesion during the last
few decades. In reforming the existing institutions in various Asian countries, it is
important to bear the above points in mind, so that we do not throw away good in-
stitutions simply because they differ from the idealized versions of Anglo-American
institutions (albeit not necessarily from the Anglo-American reality) and/or
because they are inefficient from the theoretical perspective that lies behind the
Anglo-American ideal.
In conclusion, the theoretical and empirical discussions in our paper show us
how misguided is the currently widespread suggestion that many Asian countries
need to launch radical institutional reforms that will bring them closer to the best
practices that the Anglo-American institutions are supposed to represent. Not only is
there no single best set of institutions that every country should adopt, but many
Asian institutions, which are at the moment accused of causing inefficiency and even
being mainly responsible for the current crisis, have performed beneficial functions
in the course of their development and will continue to do so at least in the near
future. If many Asian countries are forced or persuaded to change their institutions
into the Anglo-American direction, especially in a short period of time, the changes
will be at best ineffective and at worst dysfunctional.
References
Akyuz, Y., H-J. Chang, and R. Kozul-Wright, 1998. New Perspectives on East Asian Develop-
ment. Journal of Development Studies 34(6):4-36.
Amsden, A., 1985. The State and Taiwans Economic Development. In P. Evans, D. Ruesche-
meyer, and T. Skocpol, eds., Bringing the State Back In. Cambridge: Cambridge University
Press.
, 1989. Asias Next Giant. New York: Oxford University Press.
Ashton, D., and F. Green, 1996. Education, Training, and the Global Economy. Cheltenham:
Edward Elgar.
Balassa, B., 1982. Development Strategies and Economic Performance. In B. Balassa et al.,
Development Strategies in Semi-Industrial Economies. Baltimore: The Johns Hopkins Uni-
versity Press.
, 1988. The Lessons of East Asian Development: An Overview. Economic Development
and Cultural Change 36(3, Supplement):S273-90.
Banuri, T., ed., 1991. Liberalization: No Panacea. Oxford: Oxford University Press.
Barzel, Y., 1989. Economic Analysis of Property Rights. Cambridge: Cambridge University Press.
Berger, S., and R. Dore, eds. 1996. National Diversity and Global Capitalism. Ithaca and London:
Cornell University Press.
Best, M., 1990. The New Competition. Cambridge: Polity Press.
Cambridge Journal of Economics, 1998. Special Issue on the Asian Crisis. H-J. Chang, G.
Palma, and H. Whittaker, eds. Cambridge Journal of Economics 22(6).
Campos, J., and H. Root, 1996. The Key to the Asian Miracle. The Brookings Institution, Wash-
ington, D.C.
Chang, H-J., 1993. The Political Economy of Industrial Policy in Korea. Cambridge Journal of
Economics 17(2):131-57.
, 1994. The Political Economy of Industrial Policy. London and Basingstoke: Macmillan.
, 1996. Understanding the Recent Regulatory Changes in Japan and Korea. Paper pre-
pared for the Project on Regulatory Policy and Regulatory Reform for Sustainable Develop-
ment, Economic Development Institute, World Bank, Washington, D.C.
, 1997a. Luxury Consumption Control and Industrialization in East Asia. Background
paper prepared for Trade and Development Report 1997, UNCTAD, Geneva.
, 1997b. The Economics and Politics of Regulation. Cambridge Journal of Economics
21(6):703-28.
, 1998. Korea: The Misunderstood Crisis. World Development 26(8):1555-61.
, 2000a. An Institutionalist Perspective on the Role of the StateTowards an Institution-
alist Political Economy. In L. Burlamaqui, A. Castro, and H-J. Chang, eds., Institutions and
the Role of the State. Edward Elgar: Aldershot. Forthcoming.
, 2000b. The Hazard of Moral HazardUntangling the Asian Crisis. World Development.
Forthcoming.
Chang, H-J., and R. Rowthorn, 1995. Role of the State in Economic Change: Entrepreneurship
and Conflict Management. In H-J. Chang and R. Rowthorn, eds., Role of the State in Eco-
nomic Change. Oxford: Oxford University Press.
Chang, H-J., and A. Singh, 1993. Public Enterprises in Developing Countries and Economic Effi-
ciencyA Critical Examination of Analytical, Empirical, and Policy Issues. UNCTAD Re-
view 4:45-82.
, 1997. Can Large Firms be Run Efficiently without being Bureaucratic? Journal of In-
ternational Development 9(6):865-75.
Chang, H-J., H-J. Park, and C. G. Yoo, 1998. Interpreting the Korean Crisis: Financial Liberali-
zation, Industrial Policy, and Corporate Governance. Cambridge Journal of Economics
22(6):735-46.
Cheng, T., S. Haggard, and D. Kang, 1998. Institutions, Economic Policy, and Growth in Korea
and Taiwan. Journal of Development Studies 34(6):87-111.
Coase, R., 1988. The Firm, the Market, and the Law. In R. Coase, The Firm, the Market, and the
Law. Chicago: The University of Chicago Press.
, 1992. The Institutional Structure of Production. American Economic Review 82(4):713-
19.
Cook, P., and C. Kirkpatrick, eds., 1988. Privatization in Less Developed Countries. New York:
Harvester Wheatsheaf.
Coombs, R., P. Saviotti, and V. Walsh, 1987. Economics and Technological Change. London and
Basingstoke: Macmillan.
Cox, A., ed., 1986. State, Finance, and Industry in Comparative Perspective. Brighton: Wheat-
sheaf Books.
Dertouzos, M., R. Lester, and R. Solow, 1989. Made in America. Cambridge, Massachusetts: The
MIT Press.
Dore, R., 1984. Technological Self-reliance: Sturdy Ideal or Self-serving Rhetoric. In M. Frans-
man and K. King, eds., Technological Capability in the Third World. London and Basing-
stoke, Macmillan.
, 1986. Flexible Rigidities: Industrial Policy and Structural Adjustment in the Japanese
Economy 1970-80. London: The Athlone Press.
, 1987. Taking Japan SeriouslyA Confucian Perspective on Leading Economic Issues.
London: The Athlone Press.
Dosi, G., C. Freeman, R. Nelson, G. Silverberg, and L. Soete, eds., 1988. Technical Change and
Economic Theory. London: Pinter Publishers.
Eggertsson, T., 1990. Economic Behaviour and Institutions. Cambridge: Cambridge University
Press.
Evans, P., 1995. Embedded AutonomyStates and Industrial Transformation. Princeton: Prince-
ton University Press.
Feldstien, M., 1998. Refocusing the IMF. Foreign Affairs March/April:20-33.
Fields, K., 1995. Enterprise and State in Taiwan and Korea. Ithaca, New York: Cornell University
Press.
, 1998. KMT, Inc.: Party Capitalism in a Developmental State. JPRI Working Paper No. 47,
Japan Policy Research Institute, Cardiff, California.
Fishlow, A., C. Gwin, S. Haggard, D. Rodrik, and R. Wade, 1994. Miracle or Design? Lessons
from the East Asian Experience. Overseas Development Council, Washington, D.C.
Fransman, M., 1986. Technology and Development. London: Frank Cass.
, 1990. The Market and Beyond: Information Technology in Japan. Cambridge: Cambridge
University Press.
Hayami, Y., and V. Ruttan, 1995. Agricultural Development: An International Perspective. Balti-
more: Johns Hopkins University Press.
Hayek, F., 1949. The Meaning of Competition. In F. Hayek, Individualism and Economic Order.
London: Routledge and Kegan Paul.
Hirschman, A., 1981. The Rise and Decline of Development Economics. In A. Hirschman, Es-
says in Trespassing. Cambridge: Cambridge University Press.
Hodgson, G., 1988. Economics and Institution. Cambridge: Polity Press.
Johnson, C., 1982. MITI and the Japanese Miracle. Stanford: Stanford University Press.
Jomo, S. K., and M. Rock, 1998. Economic Diversification and Primary Commodity Processing in
the Second-tier South-East Asian Newly Industrializing Countries. UNCTAD Discussion Pa-
per No. 136, United Nations Conference on Trade and Development, Geneva.
Jones, L., and I. Sakong, 1980. Government, Business and Entrepreneurship in Economic Devel-
opment: The Korean Case. Cambridge: Massachusetts, Harvard University Press.
Kozul-Wright, R., and P. Rayment, 1997. The Institutional Hiatus in Economies in Transition and
Its Policy Consequences. Cambridge Journal of Economics 21(5): 641-661.
Lal, D., 1983. The Poverty of Development Economics. London: The Institute of Economic Affairs.
Lall, S., 1998. Selective Industrial and Trade Policies in Developing Countries: Theoretical and
Empirical Issues. Paper prepared for the Project on Economic Policymaking and Imple-
mentation in Africa: A Case for Strategic Trade and Selective Industrial Policies, Interna-
tional Development Research Centre, Nairobi.
Lin, J., and J. Nugent, 1995. Institutions and Economic Development. In J. Behrman and T. N.
Srinivasan, eds., Handbook of Development Economics, Vol. 3. Amsterdam: Elsevier Science
B.V.
Little, I., 1982. Economic Development. New York: Basic Books.
Luedde-Neurath, R., 1986. Import Controls and Export-Oriented Development: A Reassessment of
the South Korean Case. Boulder and London: Westview Press.
Lundvall, B-., ed., 1992. National Systems of Innovation: Towards a Theory of Innovation and
Interactive Learning. London: Pinter Publishers.
Magaziner, I., and T. Hout, 1980. Japanese Industrial Policy. Policy Studies Institute, London.
McNulty, P., 1968. Economic Theory and the Meaning of Competition. Quarterly Journal of
Economics 82(4):639-56.
Nelson, R., ed., 1993. National Innovation Systems. New York: Oxford University Press.
Nolan, P., 1996. Large Firms and Industrial Reform in Former Planned Economies: The Case of
China. Cambridge Journal of Economics 20(1):1-29.
North, D., 1990. Institutions, Institutional Change, and Economic Performance. Cambridge: Cam-
bridge University Press.
, 1994. Economic Performance through Time. American Economic Review 84(3):359-68.
Okimoto, D., 1989. Between MITI and the Market: Japanese Industrial Policy for High Technol-
ogy. Stanford: Stanford University.
Platteau, J-P., 1994. Behind the Market Stage Where Real Societies ExistPart II: The Role of
Moral Norms. Journal of Development Studies 30(4):753-817.
Polanyi, K., 1957. The Great Transformation. Boston: Beacon Press.
Radelet, S., and J. Sachs, 1998. The East Asian Financial Crisis: Diagnosis, Remedies and Pros-
pects. Brookings Paper on Economic Activity 1:1-90.
Renshaw, J., 1986. Adjustment and Economic Performance in Industrailized Countries. Interna-
tional Labor Organization, Geneva.
Rowthorn, B., and H-J. Chang, 1993. Public Ownership and the Theory of the State. In T. Clarke
and C. Pitelis, eds., The Political Economy of Privatization. London: Routledge.
Shin, K., 1994. An International Comparison of Competition Policy: USA, Japan, and Germany
(in Korean). Korea Development Institute, Seoul.
Simon, H., 1983. Reason in Human Affairs. Oxford: Blackwell.
Stiglitz, J., 1998. Sound Finance and Sustainable Development in Asia. Keynote address to the
Asia Development Forum, jointly organized by the World Bank and the Asian Development
Bank, 9-12 March 1998, Manila, Philippines.
Toye, J., 1987. Dilemmas of Development. Oxford, Blackwell.
Wade, R., 1990. Governing the Market. Princeton: Princeton University Press.
Westney, E., 1987. Imitation and Innovation: The Transfer of Western Organizational Patterns to
Meiji Japan. Cambridge: Cambridge University Press.
Williamson, O., 1985. The Economic Institutions of Capitalism. New York: The Free Press.
World Bank, 1983. World Development Report 1983. New York: Oxford University Press.
, 1993. The East Asian Miracle. New York: Oxford University Press.
, 1995. Bureaucrats in Business. New York: Oxford University Press.
, 1997. World Development Report 1997. New York: Oxford University Press.
World Development, 1994. Special Section: The World Banks The East Asian Miracle: Eco-
nomic Growth and Public Policy. A. Amsden, ed. World Development 22(4):625-70.
, 1996. Special Section: Government Action, Social Capital, and DevelopmentCreating
Synergy across the Public-Private Divide. World Development 24(6):1033-132.
, 1998. Special Section: Viewpoints on the Asian Financial Crisis. D. McNeill and H.
Boeckman, eds. World Development 26(8):1529-609.
You, J., and H-J. Chang, 1993. The Myth of Free Labor Market in Korea. Contributions to Po-
litical Economy 12:29-46.
Zysman, J., 1983. Governments, Markets, and Growth. Oxford: Martin Robertson.

The Role of Instituions in Asian Development

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

The Role of Instituions in Asian Development

Загружено:

Авторское право:

Доступные форматы

Ha-Joon Chang is professor of economics at the University of Cambridge.

The article was originally prepared for the

Вам также может понравиться