An East Asian Renaissance: Ideas for Economic Growth

An East Asian Renaissance: Ideas for Economic Growth

An East Asian Renaissance: Ideas for Economic Growth

An East Asian Renaissance: Ideas for Economic Growth

Synopsis

This book explore the future of East Asia's middle-income countries. Without the advantages of low wages or high skills, and with limited natural resources, East Asian economies are following a new path of regional integration, led by China. Along this path, policy makers must manage a migration of 2 million per month to East Asian cities; a sharp and unprecedented increase in income inequality; and growing discontent with corruption. This new agenda of domestic integration is the main challenge facing East Asia.

Excerpt

Recent theoretical
advances may help
explain the causes,
consequences, and
policy implications
of the economic
transformation that
has made East Asia
a predominantly
middle-income
region.

New Challenges, Fresh Insights

East Asia is a completely different region today compared to the place studied in The East Asian Miracle (World Bank 1993). in analyzing the rise of eight high-performing Asian economies, which did not include China, The East Asian Miracle pointed to strong fundamentals, international integration, and good government as the key factors of success in East Asia. But three subsequent developments necessitate a reexamination of East Asian growth: the biggest economic crisis of the 1990s, which showed that the governments were anything but infallible; the rise of China, the biggest economic development story of the 1990s; and the expansion of East Asia’s cities fueled by the biggest rural-to-urban shift in population during the 1990s. the meteoric rise of China, the growing concentration of trade and investment flows within Asia, the sharp financial crisis of the 1990s, and the rapid growth of cities all reflect a vastly different reality, a richer middle-income region than the one at the beginning of the 1990s (see map 1.1).

This report, like three other World Bank studies since 1993 (see box 1.1), is a contribution to the debate on how development strategies should be adapted in response to such changes. This chapter outlines the changes in the region since 1990 and compares them with what has happened in other parts of the world. It then provides a summary of developments in economic theory that may help in determining the causes, consequences, and—with additional country-specific work—policy implications of these changes.

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