Effect of State Intervention on Economic Growth of East Asian Nations

The East Asian Miracle: To what extent was state intervention responsible for the economic growth of the Asian Tigers?

Abstract

According to a 1993 World Bank report named ‘The East Asian Miracle’, the tremendous economic growth experienced by the Asian Tigers (South Korea, Taiwan, Singapore, Hong Kong) was due to the neoliberal fiscal policies implemented by their respective governments. However, it has been suggested that the state played a significant role in the economic evolution of all four states, and that it was an interventionist development model that helped the countries progress from ‘under-developed’ to ‘advance’ in only thirty years. Therefore, to what extent was state intervention responsible for this economic boom? Why did a particular growth strategy achieve such unbelievable results? This dissertation aims to answer these questions by first defining the theoretical framework on which this topic sits, before analysing the economic and political history of each of the four countries. The essay then goes on to evaluate the explaining factors behind said growth. It concludes that it was not simply state intervention that led to rapid economic growth, but rather an intense government-led development model that was used to some extent by each state. This model’s success was due to the culture, attitudes to education, and strength of the government shared in each of the Tigers.

The
East Asian Miracle: To what extent was state intervention responsible for the
economic growth of the Asian Tigers?

Introduction

The term ‘Asian Tigers’ refers to a group of four East Asian states that each underwent a phase of astonishing growth and development. From 1965 to 1995, the countries of South Korea, Taiwan, Singapore, and Hong Kong experienced growth rates of over 6% on average and astounded the international community by transforming from ‘third world’ economies into some of the most advanced in the region (Mascelluti, 2015). A 1993 World Bank report named ‘The East Asian Miracle’ attributed a market-led development model and neoliberal policies as the reasoning for their lengthy economic boom, due to the low taxes, small welfare states, and export-led policies that were observed in each of the states (1993). Indeed, since the end of WWII, the neoliberal approach to developing low-income economies has dominated academia, partially due to its success in achieving growth in the West. It is engrained within international politics and is supported by the IMF, the World Bank, and the US (Shirley, 2014). However, neoliberalism has been criticised as a mechanism for supressing under-developed states from growing (Yeung, 2000), and in the case of the four Asian Tigers, a distinct alternative road to development may be interpreted. Therefore, critics have argued that state intervention and the industrial strategies they implemented had a much more significant effect on economic development than neoliberal policies and have reasoned that it was not Smith’s “invisible hand” that stimulated growth, but rather the “visible hand” of each of the Tigers’ governments (Movahed, 2014). Therefore, this dissertation will attempt to gauge to what extent can state intervention explain the astonishing growth the Asian Tigers faced when compared to other development models by exploring which model is most applicable to each state, and why. Comparisons will be made between each of the Tigers, and overall an extensive analysis of the causes of the Asian Miracle will hopefully be achieved.

The outline for the dissertation is
as follows; first, an explanation of the theoretical background of the topic.
This consists of a breakdown of three distinct development models found in
literature which are most likely to properly explain the economic growth in
each of the Asian Tigers. The second section will analyse the economic and
political history of South Korea, Taiwan, Singapore and Hong Kong in order to identify
which economic development model was responsible for each state. The third
section evaluates why the relevant strategies where so successful in achieving
such high growth rates. Several factors are discussed including culture,
education, and political climate. The fourth and final section concludes that
whilst government intervention is somewhat responsible for the economic
development experienced, a government-led development model may be more closely
attributed to this achievement.

Theoretical Background

In order to fully analyse the
extent to which state intervention is responsible for the economic development
of the Asian Tiger states, it is vital to define the theoretical foundation on
which the topic sits. The economic development of the four Tigers represents just
one segment of a larger sphere of development economics, a topic which studies
the transformation of underdeveloped nations into more affluent ones.
Development economics is relatively new within academia, yet numerous models
that detail a country’s growth strategy have risen to prominence. These ideas
can be said to generally fall under three separate umbrellas of political
thought and have come to be seen as the most established within the topic. The
three most relevant theoretical models share the economic philosophies of Keynesian,
Neoliberal, and Heterodox theories. These are interventionist, market-led, and government-led
models for economic development respectively (Banuri, 2013). Due to the variety
and complexity of economic development, it is important to define each model in
order to determine the extent to which a state-intervention model was followed
as opposed to market-led or government-led models.

The model which most closely
resembles the notion of state-intervention is interventionist, which largely
draws upon the philosophies of Keynesianism and the idea that governments
should make necessary interventions in order to correct errors in the free
market (Deprez, 1997). Although actors are considered rational, supervision by
the state in required to stabilise output. As is the case in most monopolistic
and imperfect-competition markets, a firm may exercise abusive actions that
result in a loss of welfare, therefore state intervention is needed in order to
decrease unemployment and encourage growth (Sun, 1991). This is most often
achieved through policies such as taxation, price setting, and subsidies, and
is one of the key arguments in Keynesian economic theory (Lawlor, 2006). All
economies to some extent undergo state intervention, however the amount each
experiences varies drastically. Whilst Chandavarkar dismantled the argument
that Keynesian theories apply to the development model, he concedes that
Maynard Keynes offered the first “economic rationale for a central bank as a
development agency,” (1986) which paved the way towards a working development
model where the market and government of a state synchronise in order to
further economic progress and therefore development. Therefore, the
interventionist development model has gained significance within development
economics academia and may go far in explaining why the Asian Tigers
experienced such rapid growth.

As mentioned previously, the 1993
World Bank report regarded neoliberal economic policies as the main drivers
behind the Tiger states’ development, rather than state-intervention.
Neoliberal ideology resides at the opposite end of the development economics
spectrum to the interventionist model, and consequently gives rise to the
market-led development model. The market-led model is based on the neoliberal
argument that state intervention prevents development, as when government
interference grows too big it restricts the freedom of dynamic individuals who
drive economic growth (Ellickson, 1989). Therefore, development failures in
some economies, such as the USSR, can be blamed on overbearing state
intervention. In order to promote growth, the market-led development model
supports policies such as deregulation, privatisation, lower taxes, and the
liberalisation of trade through the elimination of tariffs and other barriers (Bhattacharjea,
2008). Supporters of the market-led model suggest that states who implement
these policies will experience freer markets and less corruption, resulting in
an increase in productive efficiency that will translate into higher economic
growth (Danby, 1998). It can, however, be argued that this model results in the
high-tech, value-added industries being dominated by more developed nations,
and that under-developed nations are trapped by low value-added industries such
as resource extraction, agriculture and light industry (Chandrasekhar, 1992). Nevertheless,
proponents of the market-led model have argued that this still remains a more
prosperous source of growth compared to the current position of developing states
and may therefore be responsible for the growth experienced within the Tiger
states (Jomo and Von Arnim, 2008).

The third and final economic
development model that may be responsible for the growth of the Asian Tigers is
the state-led model. Whilst in the interventionist model the government only
intervenes in the otherwise-open economy when deemed necessary, the state-led
model is distinctly different in that the state plays a central role in
managing resources and guiding the markets. This model is defined in relation
to the school of Heterodox economics, and what makes the government-led growth
model unconventional is that it refutes one of the key foundations of classical
economics, that what benefits a rational actor must therefore benefit the
state’s economy overall (Dow, 2007). Traditionally, rational individual actors
always want to hone in on the optimally efficient activity presented to them in
the present, whereas as the state-led model proposes that development is best
achieved when the focus is on improving future activities (Ellickson, 1989). As
rational individual actors would never participate in substandard industries of
their own free-will, a steady push by the government is therefore required in
order to invest in said activities so as to fully develop the economy in the
future. Chang and Grabel propose that the government-led growth model uses the
ensuing policies in order to stimulate growth: a firm grip over both foreign
and capital debt; an adoption of a wary attitude towards privatisation and the
nationalisation of some industries where applicable; trade protectionism to
allow budding industries to develop; a laissez-faire attitude towards
intellectual property law; and a well-defined plan in order to systematically
develop higher value-added industries (2004). Therefore, the state-led
development model may be a viable alternative in claiming responsibility for
the rapid growth observed in the four Tigers.

When looking at these three models,
it is clear that they cover a significant proportion of the policies that a
state may decide to implement in order to create growth. Therefore, it is rational
to assume that the governments of South Korea, Taiwan, Singapore, and Hong Kong
followed at least one of these models. In the following analysis, the economic
development histories of each state will be discussed in order to determine the
development path they took, and the development model each country most closely
followed will be deduced.

Country Analysis

South
Korea

When looking to determine the
extent of state intervention within South Korea, a logical starting point is
when the country finally gained independence from colonial Japanese rule in
1945, where it immediately found itself placed under US military occupation (Kim,
2014). The attainment of autonomy that they had yearned for was quickly
dominated by the Korean War (1950-3) with the North, which obliterated
two-thirds of the country’s manufacturing facilities worth over three times
their GNP (Shin, 2003). The first phase of the country’s economic development
consisted of recuperating from the destruction of the war, with US aid on
average consisting of 15.9% of GNP (with a peak of 22.9% in 1957) (Shin, 2003).
Import substitution industrialisation was implemented with 30% of aid diverted
into agricultural equipment, and the US owned 64% of investment savings (Shin,
2003). The economic growth South Korea achieved at this time was heavily
reliant on the contributions made by the US, both in investment savings and
aid, and was therefore vulnerable to market fluctuations (Shin, 2003). It can
therefore be observed that an interventionist model was already being used in
order to stimulate development.

The coup implemented by Park and
his supporters in 1961 set the marker for which the second economic development
period came to fruition: the expansion of export-oriented development and light
industries. Due to its diminishing reliance upon the US government to aid in
buying imports and its recovery from the war, the South Korean economy was now
starting to make use of the cheap labour force at hand in order to strengthen
its exportation of light industrial goods. It is here that the initial
deviation from the interventionist development model can be discerned,
propagated by the establishing of the First Five-Year Economic Development
Plan. Distinct macro-economic targets for growth were adopted for the trade
balance and industrial structure, and the plan defined clear industrial, trade
and macro-economic policies in order to achieve these goals. It was named
“guided capitalism”, in which “the state shall either directly participate or
indirectly render guidance” to crucial industries, predominantly those that
would result in rapid export growth such as the labour-intensive light
manufacturers (Shin, 2003). It is here, therefore, where the shift toward a
government-led growth model and away from state intervention was made.

The growth experienced by the country
in the early 1960s was unprecedented, reaching as high as 10% some years,
however this was not viewed as a sustainable foundation for further development
by the Park government. The country’s development may have become stagnant if
it had remained within the same stage with no high-value-added industries being
established. Therefore, government-led development policies were implemented as
they used subsidies and tariffs to shield budding advanced industries from the
global market, whilst also reinvesting the foreign currency earned through
their expanding exports into the machinery and training needed to evolve into
the next developmental phase (Chang, 2007). It is this strong push from the
state to shelter and nurture tertiary industries that indicates that state-led
development is responsible for South Korea’s growth.

This progression resulted in the
third stage of economic development, as seen in Park’s Second Five-Year Plan:
the advancement of chemical and heavy manufacturing, buoyed by new policy instruments
and legislation (Shin, 2003). Export-driven development stemming from heavy
industry sustained the country up until the early nineties, resulting in this
development era being the longest thus far. Although still being retained by substantial
government restrictions, foreign capital was pursued to help reinforce any
potential growth and exports escalated at almost 39% per annum (Shin, 2003).
Throughout this phase government-led policies were remained prominent, and factor
input increases, both in the accumulation of capital and in quality of labour
through education, resulted in a monumental amount of growth in manufacturing
output and the ideal placement for South Korea within the international market
for the next period of development (Collins, 1990). The South Korean economy
experienced sizeable changes throughout the 1990s which shifted them into the
fourth and current stage of development: the drive towards high tech
industries. High-technology exports only yielded 15% of total export in 1988,
however that figure has increased significantly year on year ever since (World
Databank, 2018).

When assessing the extent to which
state intervention was responsible for the country’s growth, it is clear that the
entirety of South Korea’s development was propelled by a central government. Well-conveyed
economic plans, state-owned industries and a determined reinvestment of
earnings in infrastructure over several decades allowed the country to evolve
through clear stages of development, even when said push into new industries
appeared less optimal to individual market actors (Shin, 2003). Therefore, it
was a state-led, rather than simply interventionist or even market-led,
development model that was responsible for the country’s economic growth.

Taiwan

Whilst sharing a similar narrative
to South Korea, Taiwan’s roots are relatively less humble, at least in economic
terms. The country found itself comparatively intact after fighting it had
experienced in the Chinese Civil War (1946-9) and still contained traces of
Japanese colonial efforts to develop: a few textile factories, rudimentary food
processing plants and handful of developed agricultural exports in pineapples,
rice and sugar (Vogel, 1993). Whilst import substitution industrialisation was
initially taken up by the government in order to provide sustainable growth,
negative experiences with inflation meant that a hard-line growth policy was
not implemented until a threat to cut off aid was made by the US in the 1950s
(Vogel, 1993). Therefore, the extent to which state intervention was
responsible for Taiwan’s development initially appears unclear.

The moment demand was deemed
adequate by Taiwan’s government, heavy industries such as electronics,
petrochemical and steel were rapidly established through heavy investment from
the state (Vogel, 1993). Whilst many businesses that were previously
state-owned were allowed to privatise during this development phase in order to
garner foreign investment and knowledge, these heavy industries remained
resolutely nationalised due to being perceived as a vital asset for the
re-conquering of mainland China (Vogel, 1993). Yongping Wu voices the idea that
private small- and medium-sized firms played a crucial part in the economic
development of the country during this era, however the Taiwan government never
loosened its hold over the economy and its direction (2004). The most
significant indicator of this was the state’s control of foreign exchange,
which constrained private firms’ procurement of imported materials and acted as
both a limit on capital risk and as a way to boost domestic demand for
processed raw materials (Vogel, 1993). Therefore, although not as
all-encompassing as South Korea, the state-led model seems to take precedence
over intervention.

The evolution from the country’s
final economic development stage into a fully-fledged high-tech industrial
state was rapid. As Taiwan’s competitive advantage in labour-intensive goods
appeared to be declining, due to a combination of a rise in competition from
China and a more educated workforce through the late 1970s, the country made a
push to advance before it was too late. The government’s role in “the inception
of pivotal technologies and in the export vigour of Taiwan’s information
industry,” (Wang, 1996) along with key large-scale industries such as
semiconductor construction was colossal and resulted in the growth of a
sizeable and skilled population of workers who fuelled the service industry and
domestic consumption with their raised disposable incomes. Consequently, when
taking all indicators into consideration, it is clear that the state-led
development can take responsibility for the rapid growth within Taiwan.

Singapore

Singapore warrants the label of
being the most ‘democratic’, if in name only, of the four Tigers in the
country’s early history: the control Li Guangyao held over the state was so
alluring that in the words of a British diplomat “politics disappeared” and
simply left an “administrative state” (Vogel, 1993). This is already a clear
indication that the growth the country experienced may have been caused by more
than simply intervention. A considerable amount of Singapore’s development can
be directly attributed to Li’s particular vision and skill, considering that
after the country gained its independence form Malaysia in 1965 he implemented
“soft authoritarianism” upon the state’s politics all the way up until his
retirement in 2011 (Zakaria, 1994).

The country’s development pursues a
similar trajectory to South Korea and Taiwan. Although it had the fortune of
not having to rebound and recuperate from a devastating war, Singapore found
itself as a single modern city-state without the means to sustain its people
due to a lack of arable land. Essential goods such as water and food had to be
imported which fuelled the need to develop export-focused light industries in
order to balance trade (Huff, 1987). Intriguingly, in order to stimulate the
light industry, the government used its resources and capital to attract
international companies to act as a substitute for the domestic lack of
managerial and technical knowledge (Vogel, 1993). These policies can clearly be
attributed to a state-led model and helped stimulate the country’s expansion
into new markets.

Heavy industry and manufacturing
became progressively prioritised throughout the 1970s and 80s, which lead to a
remarkable change in the structure of Singapore’s economy (Huff, 1987). This
was mainly triggered by the threat that mainland China’s expanding light
industries under Deng presented to the country’s output and was accelerated by a
state-led model of control through a series of reinvestments of wages in
infrastructure, communications, housing and industry by the Central Provident
Fund and a raise of the national minimum wage, which resulted in firms having
to develop more efficient modes of production (Vogel, 1993).

Contrasting with the development in
South Korea and Taiwan, Singapore’s transition into the fourth phase of
economic development was not defined by the growth of a technological industry
but instead by accomplishing Stamford Raffles’ primary vision for the country
as the financial and trading centre of Southeast Asia. Like high-tech industries,
finance and trade services demanded highly skilled labour and this, coupled
with Singapore’s advantageous geographic position, resulted in the high-level
industry that marked the country as a wholly economically developed nation,
just as technological industries do for Taiwan and South Korea.

It may be easy to think of
Singapore as a stellar illustration of neoliberal market-led development, due
to its more liberal markets and the appearance of democracy in the country’s
recent development. However, the crucial role of Li in both economic and
political direction as well as the significance of the Central Providence Fund
in developing the infrastructure required for heavy industry infer that the
government was the main engine driving the development observed in the economy,
and that more liberal aspects of the market were introduced only in the later
stages of economic progress in order to bridge the gap towards a trade and
financial hub. Therefore, a state-led model of development appears to be
responsible for the majority of Singapore’s growth.

Hong
Kong

The city-state of Hong Kong shares
many similarities with Singapore, however it differs in that it is the most
laissez-faire (and consequently market-led) out of the four Tigers. Similarly
to Singapore, a lack of agricultural capacity resulted in an urgent need for
the government to balance its trade deficit by quickly developing light
industries and following an export-led industrialisation strategy, however it
has been said that the advancement of Hong Kong through the trade and financial
services stage would have been a logical move regardless of government
intervention, due to the country’s origins as a trade port and its connection
with China (So, 1986).

The significance of the market-led model
in the economic evolution of Hong Kong is undeniable, as can be seen in the
government’s “positive non-interventionism” approach to the economy (Yeung,
2000). However, there are still a few aspects of its development that can be
attributed to the government’s role in driving the economy. Vogel in particular
considers the distribution of the country’s public funds with a significant
portion being allocated for the improvement of infrastructure that would be
needed for heavy industries – universities, roads, and most importantly
developing land for heavy industry use (1993). Furthermore, this all started at
least a decade before any real market-led demand was felt for these public
goods (Vogel, 1993). The government may have appeared to be taking a step back
to let the market grow organically, however it is clear they held ideas about
the direction the economy should take.

Despite being a former entrepot,
Hong Kong, like Singapore, developed to the extent that it became a chief
industrial manufacturer as well as a financial hub for the region (So, 1986). It
is somewhat of an outlier among the Asian Tigers in that the country
consistently held a laissez-faire approach to the global market and can
therefore be considered as sharing the most similarities with a market-led
model of development. However, the role the government played in stimulating
the economy to develop beyond its initial phase cannot be overlooked, and
therefore the significance of state intervention should not be ignored.

Evaluation

Whilst the previous section has
determined whether state-intervention is more responsible for economic
development than the other models, this section aims to evaluate why the
relevant development models were so successful in stimulating growth within
each of the four Asian Tiger economies. When taking into consideration the
individual paths to development they took, it is clear that the overarching
model most applicable to each economy was that of the state-led development
model. Although Hong Kong took a market-led approach to some extent, each state
worked to push development ever further instead of settling into a particular
set of industries, by re-investing in the capital and infrastructure within
emerging industries and also protecting said industries from the international
market until they were large enough. Therefore, it can be said that a state-led
development model, rather than simply state-intervention, was responsible for
the miraculous growth observed within the Asian Tigers. However, a further
question presents itself; why was the state-led model was so successful within
these particular states? Indeed, similar situations in Latin America and the
USSR at the time did not lead to the exorbitant growth that was experienced in
South Korea, Taiwan, Singapore, and Hong Kong (Lall, 1996). Consequently, the
following analysis will look into several factors that might explain why the state-led
growth was responsible for development within the Tigers, rather than
state-intervention.

The first factor that contributed
to the triumph of state-led growth within the Tigers is that of the shared
Confucian culture within the region (Tai, 1989). Traditionally, many economists
viewed the religion as an inherent barrier for economic development, due to its
historical ties to feudalism that directly oppose contemporary capitalism
(Mascelluti, 2015). However, the importance placed upon the collective family
and social hierarchy within Confucianism could be said to instil the mindset
needed to endure the sacrifice of individual economic interest in favour of the
country’s prosperity, an attitude which appears prevalent within the Tigers
(Shirley, 2014). This idea of sacrifice opposes the ideas observed in the
interventionist model, where only policies which benefit rational actors will benefit
a state’s economy overall. Furthermore, the viewing of the government as a
higher power and the value placed upon education also helped bolster the feat
achieved by each of the Tigers’ long-term economic goals (Mascelluti, 2015).
Conversely, in other parts of the globe, it could be predicted that submission
would not be so easy due to individuals being deficient of this unique outlook.
This may explain why government-led growth may not be so successful elsewhere.

The second factor explaining why state-led
growth was so effective within the Asian Tigers is that education was viewed,
to some extent, as crucial to the development of the economy by each of the
four countries. As the demand for secondary and tertiary education drew
throughout the 1970s, each state started to invest in these institutions, and
by 1986 secondary school enrolment rates had increased dramatically, reaching
95 per cent in South Korea (Mascelluti, 2015). This increase in the proportion
of an educated labour force resulted in more individuals seeking higher skilled
jobs in burgeoning industries, which helped the state-led development strategies
by growing these industries until they no longer needed to be sheltered from
the international market (McLoughlin, 1985). Furthermore, a more educated
society typically results in a more efficient and stable economy, translating
into higher growth (Overholt, 2011). Therefore, it is clear that each of the
Tiger states’ decision to invest in education provided a stable and
advantageous foundation from which government-led development, and therefore
economic growth, could thrive.

The third and arguably most
important factor in explaining the success of the state-led development model
is that of the political strength demonstrated by each of the Asian Tigers’
leaders. Each of the four states possessed legitimate central governance that
provided the ability to consistently direct the development of the markets
without any noteworthy domestic challenges (Shirley, 2014). In the case of
South Korea, their government’s authority was founded upon “forced unity” in
opposition of the North (Vogel, 1993). Consequently, the prosperity of the
South could be easily measured by its citizens by their economic position in
comparison to the North. With regards to Taiwan, much of the country’s status
is focused around the state’s connection with China. Found both in leadership
and the population, Taiwan’s competition with its neighbour supplied the
legitimisation for uninterrupted GMD rule (Vogel, 1993) and, similarly to South
Korea, provided an effective economic focus to the government. The connection
between the success of government-led growth within Hong Kong and Singapore and
the intentions of their individual governments is an all the more basic case of
survival. Due to their small size, neither possess the agricultural means to
prosper as self-sufficient states. The two states’ leadership legitimacy was
therefore founded upon the sustained survival of the countries’ economies.
Therefore, to some extent, in all four states the legitimacy and furthering
prosperity of the government depended on the constant financial attainment they
could securely deliver to the population. As a result of this, each government
had a large incentive to fervently and continually pursue sustainable
development (Wade, 2004). Therefore, instead of implementing interventionist
policies to promote moderate development in an otherwise market-led economy, as
would be the case in an interventionist model, the state-led development model
was responsible for significant and sustained growth throughout the period.
Furthermore, due to each government not founding their legitimacy on either
democracy, which could create volatility and an absence of long-term goals, or
ideology, which leaves no room for adjustment due to the combining of
development and a fixed path, this permitted each Tiger state to achieve
permanent sustainable growth (Wade, 2004).

Consequently, it can be clearly
seen why the state-led model for economic development, rather than the
interventionist model, was responsible for the growth observed within the Asian
Tigers. Their shared culture, stances on education, and strong political
leaders, all played a role in cultivating the perfect climate in which the state-led
model thrived. The approach the Asian Tigers took to development is therefore
best surmised as “success due to coherent and flexible policies, effective
implementation by the state… and political capacity to insulate economic
planning from competing interests” (Shin, 2003).

Conclusions

When considering the extent to
which state intervention was responsible for the economic growth of the Asian
Tigers, it is clear that its impact was small. Rather, an intense state-led
development model, using well-defined plans and investment strategies, had a
much larger effect in stimulating growth within the majority of the countries.
This model defines a powerful central government that employs varying
strategies to stimulate development despite the desires of individual workers,
as opposed to the Neoliberal model’s market liberalisation and the Keynesian
ideas of government intervention. Whilst an interventionist development model
is a viable option for growth, in this instance the state-led development
strategy of nationalisation and substantial investment in fledgling industries
was crucial to the rapid industrialisation and economic growth of the Tiger
states. Whilst Hong Kong appeared to lean the most towards a market-led model,
it is clear that the neoliberal ideas supported by the 1993 World Bank report
can be rebuked and that the state-led model of economic development was the
most responsible in developing the Asian Tigers far beyond their predicted
means.

The success of the state-led development
model is due to a manifestation of unique cultural values and a focus on the
importance of education. It is also due to the particular stresses placed upon
each government to solidify their legitimacy by developing the economy. This
dependence upon the development of the markets for legitimacy instead of
ideology or democracy permitted the Tiger states to achieve stability and flexibility
within their long-term goals, which successfully aided in their development.
The Asian Tigers allow us to observe an illuminating alternative to the most
common classical developmental approaches considered in state-building
exercises, that normally stress the significance of liberal values such as
market-led growth and democracy. Reproducing their accomplishments may be
achievable, however it will necessitate a complete change in our attitude
towards development economics and our notion of the connection between a
government’s legitimacy and competence.

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